7 ways to find success when your ‘cheese’ is moved
“As soon as I finished reading this, I ordered copies to help us deal with the relentless changes we face.” Those words could easily have been from a reverse mortgage originator right? Relentless changes do sound like the current state of the reverse mortgage marketplace.
Who Moved My Cheese is a number one New York Times bestseller that recounts the tale of two mice, Sniff and Scurry, and two humans, Hem and Haw, who live in a maze. Everything was going well until someone moved the cheese. The cheese is a metaphor for what we want in life. For a realtor, it’s more qualified and motivated homebuyers. For reverse mortgage professionals, it’s more closed loans. All of us are sniffing for and chasing the cheese.
So who moves our cheese? Often it’s those who regulate reverse mortgages. Other times it’s market conditions outside our control. Sometimes we unwittingly move it.
Each character in the story responds differently to change. Sniff sniffs out changes quickly and often early on. Scurry jumps into action. Hem denies that cheese has been moved and fears the worst. Haw knows that adapting to change can lead to something better!
I would encourage each of you watching today to order a copy of this short book. It’s an easy read that can be knocked out in a weekend. Until then here are the seven lessons we can glean from this classic allegory.
1- Change happens. The cheese is always getting moved. 2- As a result we should anticipate change instead of pretending it won’t happen again. 3- Once change happens we should observe change closely so we know when it’s getting old and new cheese is coming. 4- We should learn to improvise, adapt, and overcome each time the cheese is moved. 5- We must embrace the change and change with it! 6- Rather than respond with anger or fear we should enjoy the change and the taste of new cheese. 7- Prepare to change again, again, and again.
So who moved your cheese as a reverse mortgage professional? I would imagine our many answers may be similar. Chime in with your two cents in the comment section below and learn how to get some new cheese by ordering this book. Have a great weekend!
9 Comments
Thanks Shannon. Good book. Read it in 1997. This comes up every time changes are occurring. Since entering REVERSE 20 years ago, MY CHEESE has been moved every year and during many years more than a few times. Today, the borrower is paying more in closing costs, getting less in available funds, more often than not – there are insufficient funds to even cover their closing costs and mandatory payoffs, and most often nothing remaining to make considering the loan further. And, to top it off, many need a LESA and super-fast rising insurance costs ae raising LESA set asides to new heights, especially in FL where many homeowners ae going from $1500 a year to $5-6,000 a year for their homeowners insurance.
Add the higher interest rates and you have a “PEFECT STORM” on your hands. The cheese has not only been moved from inside the maze, it is gone entirely, whether eaten or moved away. The term STC or Short to Close, has become a daily occurrence for most all LO’s in the REVERSE business.
Let’s hope this week’s NRMLA meeting brings about some changes that could move the cheese back into the maze and give us a shot at making a living again. As we all know, the price of cheese is so high today, most LO’s cannot afford it right now. Suggestion: I’d make these immediate changes to assist more seniors in getting approved for their REVERSE HECM and help them out now when they need it most. In the last month I’ve had to suggest homeowners sell their home as REVERSE is insufficient for their needs. This happens daily on $500K homes that get around $150K and not enough to cover mortgage, closing costs, other debts and probably a LESA as well. The industry needs to start turning things around and move our cheese back into the maze.
1. Use some of the FHA super pool of MIP funds (now in the Billions) to reduce the FHA insurance to 1% from 2%. This will lower closing costs and give back those dollars back to borrowers.
2. Increasing the % that borrowers are getting. Absurd that many get as little as 28-29% of their homes value and then only 60% of that amount now.
Waiting a year for the other 40% they may need now, will kill many deals. We save it’s thee to force savings in America. Do that to the 18-59 year olds, not our struggling seniors at the end of their lives. A saving account is not what the Dr. prescribed, as they need the $ now. After all, it’s their equity in their home and if we truly want to help them, we’d do this now. Why loan them $ to save for another 366 days? Is it their equity to spend or not? They have debts now and making them wait another year for the remainder of the funds, paying interest on their debt, is harming them even further. Does FHA and HUD really care about seniors? If they did, they’d let them use 100% of the funds to pay their closing costs, all debts, and their mortgage.
3. Let revolving and installment debts be paid off at closing. Absurd that funds available cannot be used to pay off debt, and very possibly get their financial assessment approved instead of declined or requiring a LESA.
Overall, give them lower closing costs, more funds, and access to all of it, allowing them to better qualify for the HECM.
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Excellent inputs, Mike!
Thank you Shannon. I read this book years ago and just read it again a few months ago. Being in the mortgage industry for over 30 years, the cheese keeps moving, that’s for certain. Forget about the lost cheese and go find some more.
Thank you, Todd. New cheese indeed!
Mike Johnson your comments are spot on!
I read the book many years ago, and I often recommend it to others struggling with change. Do nothing, wait for things to return to how they were previously, or go out or look for another kind of cheese.
A great idea to help those you know Lorraine. Thanks!
Old book. Great principles but simply changing our own mindset isn’t going to save us from all the short to close. Perhaps the ‘industry’ could propose the following to help us out?
1) Let us payoff debt with the HECM
2) Drop the 60% limit 1st yr If being used to pay off addl debts…or with loan limits so low perhaps drop 60% entirely?
3) Stop the regurgitation of old charge off debt (forward FHA ignores a collection company if it is clear the debt is the same charge off debt listed earlier by original creditor. Only in Reverse do we ignore the charged off original debt but then tell the B they have to be in a payment arrangement with the recovery service).
#1 and #3 can be done on any regular forward refi. Why are we still waiting on this with the HECM?
Where is the calvary? When are they coming? Do they need a map?…lol
My best to all at NRMLA!
“The cheese is a metaphor for what we want in life. For a realtor, it’s more qualified and motivated homebuyers. For reverse mortgage professionals, it’s more closed loans. All of us are sniffing for and chasing the cheese.”
With all of the California real estate salespeople in this industry, it is hard to believe that they accepted your premise about us, like they have seemed to. I have been a California real estate broker for over three decades, I do not want or need more qualified buyers. What I really need is more closed sales. Neither reverse mortgage originators nor real estate salespeople make money just because we have increased the number of qualified prospects. We both only get paid from closed transactions. For both groups, our revenues come from commissions generated after we close transactions.
Mike, I do not know what you are complaining about. You despair that “today, the borrower is paying more in closing costs, getting less in available funds, more often than not – there are insufficient funds to even cover their closing costs and mandatory payoffs, and most often nothing remaining to make considering the loan further.” When I came into the industry in early 2005 the expected rate was over 6% and of that the margin was just 1.5%, the expected rate index was the same 10 year CMT we use today, and the highest MCA available was less $313,000. In 2002 when you came into the industry, the expected rate was about the same (?) but the highest MCA was most likely even smaller depending on the areas you were providing HECMs to. The percentage of upfront costs to principal limits were generally slightly higher, since there were no caps on origination fees and they were normally charged in full due to the SRPs and YSPs being so low because the industry as a whole was selling all closed HECMs to Fannie Mae with the exception of a few being held in the lenders loan portfolio.