4 Comments

1. 

   Jay Allen Kaplan

   October 5, 2018 at 6:36 am

   Shannon;

   You know I love to listen and enjoy your videos and podcasts, BUT I do not agree with what I see as “giving up” on reverse by
   diversifying into forwards. I had done forwards of all kinds for almost 40 years including owning a small mortgage bank with some
   200 employees licensed in 43 states. I know that many L.O.s in are world still do both, but I believe that being an expert in reverse
   to our audience is important. As for diversity, we have so many more products to learn and execute; we need not look outside
   the universe of reverse to find it.
   Just a thought.

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     Shannon HicksModerator

     October 5, 2018 at 7:44 am

     Jay- thank you. I agree…for some diversification is not the road for all. For some yes.

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2. 

   James E. Veale, CPA, MBT

   October 5, 2018 at 11:00 am

   Jay is generally correct except I question if most HECM originators are HECM experts.

   Many people in our industry know how to present this loan but few can determine how an adjustable rate HECM works in year 2, 3, 4, etc. They are lost. In fact it is so bad, they do not know how to demonstrate how an interest rate change will impact an adjustable rate loan amortization schedule and thus leave the borrower with little more than the blind leading the blind sensation at to how interest rate changes can change their loan other than very general terms.

   I also wonder where those, who tell us that within three years of origination, the MIP that existed on 6/30/2017 (IMIP of either 0.5% or 2.5% and ongoing MIP of 1.25%) will result in a higher MIP cost than the MIP structure now in place (2% IMIP and 0.5% ongoing MIP), got their elementary school math education? Compare those loans where the value of the home is $600,000 but the beginning loan balance is composed of just $100,000 of principal at closing and no draws are taken or pay downs made during the life of loan.

   Let us assume that the average effective interest rate is 5% in both cases in their first three years and total closing costs other than IMIP total $9,000. In the case where the loan closed on 6/30/2017, IMIP is $3,000 so that the total balance due at closing is $112,000. The balance due in 3 years is $135,032 of which $4,606 is ongoing MIP. Thus total MIP in three years is $7,606.

   As to the loan closed today, the IMIP is $12,000, making the total balance due at closing $121,000. After 3 years the balance due is $142,652 of which $1,968 is ongoing MIP for total MIP of $13,968. This disproves the illusion that the new MIP structure will always result in lower overall MIP after 3 years.

   The individuals that make this claim usually do not understand that ongoing MIP is charged monthly so that it is multiplied by the balance due monthly but the IMIP rate is multiplied by the Maximum Claim Amount. Due to the PLF and the amount of money the borrower takes from the loan, the balance due on the loan is always lower than the Maximum Claim Amount until assignment.

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3. 

   John A. Smaldone

   October 5, 2018 at 11:20 am

   Shannon,

   I enjoyed your your broadcast as always. I also read the comment by Jay Kaplan. I can understand both point of views. Like Jay, I came from the forward world, owned 3 mortgage companies and crossed over into the reverse space 21 years ago.

   I have seen many changes over the years with the HECM, maybe more radical ones since 2015. Some were good, some bad, we are now in a situation that those of us who want to stay in this space and survive, must adapt and approach a completely different senior market than the one we had 5, 10 or even a few years ago.

   I am in no way giving up on the HECM or the reverse mortgage with its ever growing proprietary programs! We have a market out there, a big market but we have to be very diligent in our research. We also must change our work habits and go after the higher valued properties, those seniors with very little debt or none at all, it is out there for us to find!

   As far as diversifying, I don’t disagree with you on that Shannon, however, I feel it needs to done separate from the reverse mortgage division. The two divisions can work hand and hand with one another and most definitely benefit one another. I even vision each division learning as much about each others space and products where good lead trade offs can occur within.

   However, when it comes down to the actual application process, this is when the reverse mortgage specialist, processor and department comes in to take over. This also pertains to the forward division as well. Both can benefit from one another existence within and profit from one another with a good referral fee program established between the two divisions.

   That is my 2 cents worth on it Shannon. You make it a great weekend for yourself and your family!

   JS

   John A. Smaldone
   Hanover Financial Services
   865-980-583: Office
   865- 980-3583
   john@hanover-financial.com
   http://www.hanover-financial.com

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