A Bright Future

[vimeo id=”84978390″ width=”625″ height=”352″]

Professor Sees Reverse Mortgages as a Cornerstone for Retirement Planning

reverse mortgage news

It’s no small endorsement. Well known Columbia Business school professor Christopher Mayer not only sees a bright future for reverse mortgages but he’s going into business himself. Mayer is tapering his teaching responsibilities at Columbia to serve as CEO of the startup reverse mortgage lender Longbirdge Financial….

 

For more reverse mortgage tools, technology & training visit www.ReverseFocus.com

Download video transcript here

 

Breaking the Cycle of Business As Usual

[vimeo id=”84356549″ width=”625″ height=”352″]
[ad#Lead Central 2014]

Are You Ready for the New Way of Doing Business?

Reverse Mortgage Business News

Doing business as usual is a sure recipe for failure in our fast-changing industry. First year distribution limits, borrower financial capacity and lower lending ratios are the new reality of reverse mortgage lending. Beyond industry-wide efforts like “Extreme Summit” to redefine the reverse mortgage’s public image lies a more crucial and practical consideration. Just how should we be doing business in 2014? In our most recent online training “Asking the Right Questions” which over 500 professionals attended we examined several facets of our interaction with borrowers. At the conclusion one attendee commented “prescription before diagnosis is malpractice’. In other words, to make recommendations to any prospective borrowr without first conducting extensive fact finding is both short-sighted and  unprofessional.

What Lies Ahead?

[vimeo id=”83988569″ width=”625″ height=”352″]
 What Can We Expect in 2014?

Reverse Mortgage News

With the changes and permutations the HECM program has undergone since 2010 one could argue we have already undergone a makeover of sorts. The Saver program, HECM for Purchase and the introduction and revocation of the standard fixed rate. True. However HUD’s recent revamp of the program stands apart as it’s first and only change that is a hard push back to the program’s original intent…to help senior homeowner’s age in place. The Saver gaves us increased crediability with lower costs and opened doors in the financial community. The HECM for Purchase expanded our legitimacy amongst real estate professionals and builders while the fixed rate maximized proceeds while securing interest rates. With recovering home values and a consolidated product what does 2014 hold in store? Here are just a few  speculations on what we can anticipate.

#1- New marketing. While the traditional reverse mortgage ads of the past increased public awareness of the reverse mortgage product, they have also attracted detractors concerned the typical message attempts to lure seniors with promises of vacations, luxury purchases and a flush retirement lifestyle. That may be a stretch yet it warrants our attention. In 2014 expect to see new and creative campaigns focusing on the HECM’s role in retirement planning versus cash alone. Will this attract a more affluent borrower? Time will tell.

#2- Further lender consolidation. We have already seen some medium sized lenders exit the space since last October. Expect a few remaning key players to step to the sidelines in the coming months. Today’s lending environment presents particular challenges to smaller shops with increased regulatory and compliance costs.

#3- Tenure, the loan de jour. Just as the Standard Fixed rate was the rage expect lenders and loan officers to begin promoting the powerful flexibility and growth potential of deferred tenure payments or a line of credit. Though some have lamented the loss of the standard fixed this new product landscape will convert many back to presenting the HECMs true flexibility and long term value when structured properly.

 

Download video transcript here

For more Reverse Mortgage news, technology & training visit ReverseFocus.com.

2013: A Turbulent Year

[vimeo id=”82798244″ width=”625″ height=”352″]

A Look Back at a Bumpy 2013

reverse mortgage news

For reverse mortgage professionals 2013 will go down as a bumpy ride. And what a ride it has been. In the last ten years I cannot recall a year with more substantial and industry-changing developments. 2013 was rang in with HUD’s announcement they would be ceasing the problematic Standard Fixed Rate Product. While it helped many borrowers who needed maximum proceeds to payoff existing mortgage balances it also added to FHA’s risk of future insurance payouts from its Mutual Mortgage Insurance (MMI) fund. One look at the amortization chart of a fixed rate loan with the full upfront distribution and it didn’t take a mathematician to figure out  substantial risk was baked into the fixed rate loan. Unfortunately generous payouts in loan compensation unduly influenced some originators where a more flexible adjustable rate loan may have been more fitting.

While politicians may be adept at spending money they are also politically astute knowing a faltering FHA Home Equity Conversion Mortgage program required some painful changes lest they incur the wrath of watchful policymakers and voters. HUD asked for and received the authority needed to make program changes witht the passage of the Reverse Mortgage Stabilization Act which led to product consolidation. After eliminating the standard fixed rate in April HUD moved to eliminate the standard adjustable and both saver loan programs altogether in favor of one two-tiered product.

Download video transcript here

For more reverse mortgage news, technology & training visit www.ReverseFocus.com

Shaping the Message: Extreme Summit

Controlling Our Market Brand and Perception

Marketing experts see plenty of companies begin a public relations campaign and then leave it in the hands of the media. When it comes to reverse mortgages one can safely say the media has done its share of harming the reverse mortgage’s reputation with half-truths, inaccuracies and outright misleading statements. Sure some media outlets have given balanced or positive coverage but are we controlling and shaping the message. The good news is that our industry is taking action. The National Reverse Mortgage Lenders Association in cooperation with several lenders is launching the “Extreme Summit”. Its a PR effort focused on geo-targeted advertising, driving positive impressions in the news and rebranding the HECM product itself.

The idea was born from a brainstorming session held at NRMLA’s 2012 annual meeting in San Antonio led by Liberty Home Equity Solutions CEO Otto Kumbar. Lender participants are putting there money where their mouth is committing over $2 million dollars to date. Such a campaign is critical since the perceived typical reverse mortgage borrower is becoming more scarce in light of reduced lending ratios and the financial assessment. If we let the media and general public push the erroneous notion the loan is only for the house rich and cash poor our marketshare stands to take another cut. Rather than playing damage control…

Against The Wind

[vimeo id=”81221046″ width=”625″ height=”352″]

2014 Presents Challenge & Opportunity for HECM Industry

reverse mortgage newsThe classic Bob Seger song laments, “Against the wind. I’m older now but still running against the wind.” Both retirees and our industry are pressing against the resistance of retirement funding and a more restrictive product for us to offer. The good news is that the reverse mortgage industry and the HECM product have proven their staying power having endured one of the worst housing crashes in history, an economic crash and numerous product changes. Also increasing home values have buoyed production with an increase of 15% through November.

The next headwind will be felt once HUD enacts the financial assessment in it’s effort to reduce risks of borrower defaults and subsequent claims against FHA’s insurance fund. But are some of these recent developments a blessing in disguise? Columnist Phil Hall in the National Mortgage Professional Magazine says yes. Hall says, “A new oversight regimen may finally help to erase the lingering doubts surrounding the product.” If we look at the true obstacle for market growth it’s not the 15% reduction in principal limits, the elimination of the Standard Fixed rate or increased insurance premiums. It’s our industry’s reputational woes. Hall cites one originators experience…

Download video transcript here.

Tightening HECM Guidelines Opens Door for Private RMs

[vimeo id=”80639100″ width=”625″ height=”352″]

Increasing Restrictions & Possible Lower Lending Limits May Spur the Return of More Proprietary Loans

Reverse Mortgage News

Having absorbed the recent elimination of federally-insured reverse mortage products, principal limit reductions and increased underwriting requirement many ask “when will we see proprietary reverse mortgages again?”. Good question. Presently our national lending limit remains at $625,500 through the end of this year thanks to HUD’s mortgagee letter in December 2012. Will HUD continue to extend this lending limit? Perhaps but unlikely. In the wake of a record 1.7 billion dollar bailout from the treasury and unrelenting scrutiny from lawmakers due to projected losses in FHA’s insurance fund, many may feel little sympathy for seniors with higher valued homes. In a risk-adverse and financially insecure political climate few will advocate for retirees they consider well-off. Additionally many industry leaders expect a return to a $417,000 national lending limit in 2014. Politics and budgets aside it comes down to the pivotal role of money. Mike McCully with New View Advisors said…

Get more reverse mortgage news, tools & technology at www.ReverseFocus.com.

Retirement Views May Expand Reverse Market

[ad#Network Funding]

[vimeo id=”80085113″ width=”625″ height=”352″]

Changes In Retirement And The Reverse Mortgage Market

In recent years American’s views on retirement have changed substantially. Many are working longer not from choice but need. Dan Gorin, supervisory policy analyst for the Federal Reserve said “The definition of retirement has changed dramatically. In the past when we asked people surveyed, those who were planning to work forever had answers that were twofold; some said ‘I like to work,’ and some said, ‘I need the money.’ More recently, more people saying they’re never going to retire because they need to work.” What is ironic is that only 8% of those aged 62 or older have even considered a reverse mortgage and 2% actually took one according to a nationwide survey conducted last December by the RAND American Life Panel.

Reverse Mortgage Market News

So what are the other 92% doing? It may boil down to denial and resistance in seeking assistance. Gorin says fewer than half, yes half of Americans actually seek advice on housing and retirement finances. This is tragic as the the home represents the majority for even moderately affluent individuals pre-retirement wealth.  Many Pre-retirees are aware of the benefits of non-taxable home sales gains, mortgage interest tax deductions and energy tax credits but oblivious of the assets full potential when employed in a comprehensive retirement plan. Not surprising since most senior homeowners have no experience in converting debt into cash flow. This chart from the American Housing Survey in 2007 shows the sleeping giant of home equity with 64% having no mortgage whatsoever and 35% holding some combination of a mortgage, second or line of credit. Today’s retirees overlook their home being more concerned with equity security than income security. Equity security is hard-wired into the American psyche. Work, save, payoff your mortgage and retire with no mortgage payments as you transition into the fixed income years of your retirement. Income security however, lends itself more to truly solving the most vexing issue in retirement…

Find reverse mortgage news, tools and training at ReverseFocus.com !