Slow Down to Speed Up

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Address Problems Early…

This week Pete Mendenhall joins John Luddy discusses the how Norcom’s system helps you focus on sales while they speed up your commission payout…
About John Luddy: John has trained reverse mortgage professionals how to be successful when sitting face-to-face at the kitchen table with prospective HECM borrowers. Norcom is looking for qualified loan officer candidates. To learn more call 1-860-507-2582 or email John Luddy here

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The Eyes Have It



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We’ve covered seniors and hearing loss, including the incredible regenerative benefits of music for brain health. There are even technologies that help senior living communities keep residents engaged with hearing assistance that adjusts individual sound for multiple residents simultaneously — a real boon considering that by age 85, 80 percent of people have some degree of hearing loss.

But aside from exhorting seniors to get their eyes checked, visual stimulation hasn’t been addressed with the same vigor. Until now.

AI Vision

NuEyes, profiled here, functions like digital hearing aids for the eyes, and is certainly a blessing for those with low vision. However, it’s still a pricey out-of-pocket expense for someone who relies on Medicare or other insurance to cover health care costs (unless they have a HELOC or HECM, which might be an excellent resource to tap for health restoration until wearable technology becomes a reimbursable expense.)

Similarly, Oculus, a virtual reality company that Facebook founder Mark Zuckerberg bought in 2014, could soon enable a doctor sitting in San Francisco to see patients in a clinic in Kenya. The VR headgear would allow the user to move around and interact with people in the distant environment, participating in research, treatment — possibly even surgery. Impressive.

A fully immersive experience 

reverse mortgage newsWhile these visual breakthroughs are very valuable, they don’t directly address the need of seniors who are homebound or unable to travel, and longing to see the sights they remember from years gone by, even just the everyday experiences they can no longer physically access: movies, museums, concerts. Or maybe they long to attend their granddaughter’s college graduation, taking place in a far-flung locale.

Enter Jake Kahana, a New York-based designer and film director who recognizes that while VR is a hot button for Millennials, seniors are the fastest-growing population cohort, and are much more likely than their grandchildren to become armchair travelers. So Kahana created BettVR With Age, a series of VR films that explores how we can use virtual reality to improve the quality of life for seniors and people with limited mobility.

He began with immersive research, visiting centers such as DOROT, a non-profit organization whose goal is to alleviate social isolation and provide concrete services to older adults, in order to discover what seniors might find useful in a VR experience. MIT startup Rendever, which helps seniors living in care facilities “relive, reconnect, and re-inspire”, supplied the software.

Days of Future Past

Kahana then created ten films, from a violin concert to a dance rehearsal, a World War II-era theatre performance to a museum tour. Combined with Google Maps’ VR app, Kahana was able to “send” bedbound 78-year-old Craig Palmer to Amsterdam, Stonehenge (a favorite vacation site of his), and a stretch of Broadway where the former singer and actor lived and worked for many years. He was even able to poke his head backstage at an Upper West Side nightclub he often visited — all without leaving his apartment.

After the fifteen-minute VR excursion down memory lane concluded and Kahana removed the headset, he asked for Palmer’s feedback. Ever the actor, Palmer grinned and replied, “It was awesome. But it would be better if I had a scotch.”

More Than Fun and Games

And virtual reality offers more than just a good time. It can be a game-changer for senior health and mood, which may be especially helpful for your reverse mortgage clients and prospects who are choosing to age in place.

Dennis Lally, co-founder of Boston-based Rendever, says VR is being studied as a way to reduce pain, anxiety, stress and social isolation. “With VR, it’s now possible to track the human interaction with virtual tasks and leverage virtual reality analytics to measure the success of these activities.” Massachusetts General Hospital is in the process of testing Rendever for such outcomes.

In San Francisco, physician Sonya Kim developed Aloha VR to help depressed and agitated patients to a better quality of life. She’s witnessed violent dementia patients become more relaxed after using VR.

Finally, VR headsets are making significant inroads into long-term-care facilities. The resident engagement director at one assisted living and memory care community reports, “Five minutes after they try VR, they are so stimulated. It’s a mood changer. They are laughing and smiling and engaged.”

Rendever is now in more than 30 senior facilities; by year-end 2017, they plan to be in several hundred nationwide. And it might be just the ticket for a HECM client who, while happy the HECM allows her to remain at home as she ages, would dearly love to do some armchair traveling.

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What are your thoughts? Please leave your input in the Comments section below, and share this post on social media using the Twitter, Facebook and LinkedIn icons at the top of this page. Thank you!

HUD Reins in HECM Program: Industry Reacts

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Exclusive Interview with Shelley Giordano from Funding LongevityScreen Shot 2017-09-01 at 9.41.37 AM

This week we discuss:

  • How HECM lenders will compete under the new rules
  • Potential changes to the how the HECM is viewed by seniors and HECM professionals
  • The recent changes in light of the HECM’s mission
  • Impact of lowered ongoing FHA premiums on the principal limit growth (line of credit)
  • The ‘ruthless’ option

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HUD is soliciting feedback from interested parties until September 29, 2017. Feeback can be submitted to: answers@hud.gov

Official Mortgagee Letter 2017-12 “Home Equity Conversion Mortgage (HECM) Program: Mortgage Insurance Premium Rates and Principal Limit Factors

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What are your thoughts? Please leave your input in the Comments section below, and share this post on social media using the Twitter, Facebook and LinkedIn icons at the top of this page. Thank you!

 

Market Disruption Brings Opportunity


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The Art of Business Card Marketing

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What do your business cards say about you?

This week John Luddy discusses business card strategies including guerilla marketing using your cards!

About John Luddy:

John has trained reverse mortgage professionals how to be successful when sitting face-to-face at the kitchen table with prospective HECM borrowers. Norcom is looking for qualified loan officer candidates. To learn more call 1-860-507-2582 or email John Luddy here

BREAKING: HUD Cuts PLF Factors, % Rate Floor & Increases Upfront FHA Insurance Premiums

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Without any prior warning or industry comment, HUD formally announced an increase of upfront insurance premiums for all borrowers, regardless of initial distributions, to 2% upfront, and .5% for ongoing mortgage insurance premiums. The agency stated the need to ensure the continued economic sustainablity of the HECM program and its fiduciary responsiblity to taxpayers.  [See Mortgagee Letter 2017-12] [ Wall Street Journal Article View on Facebook to see full article]

HUD has lowered the interest rate ‘floor’ from 5.06% to 3.00% in it’s PLF tables, essentially pushing lenders to compete on interest rates and margins. We expect to see more lenders switch from the monthly to the annual adjustable LIBOR index in response. In addition the new PLF tables accomodate a rising interest rate enviornment with lending ratios provided as high as up to 18.875%, wheras the previous tables zeroed out lending ratios at 10%. [New 2017 PLF Tables] [Old 2014-2017 PLF Tables]

In our analysis, the reduction in ongoing FHA premiums will significantly reduce the ongoing growth of the HECM’s Principal Limit (available funds), or what many refer to as the line of credit. This development will substantially change several strategies touted in recent years, such as the Standby Reverse Mortgage, and those seeking to use increasing available funds as a hedge against unexpected financial shocks in retirement.

Principal Limit Factor will be reduced from 64% to 58% on average and an approximate 20% reduction available funds for most borrowers:

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* 20% reduction with new PLFs and lower interest rate floor after October 2nd, 2017

HUD is soliciting feedback from interested parties until September 29, 2017. Feeback can be submitted to: answers@hud.gov

Official Mortgagee Letter 2017-12 “Home Equity Conversion Mortgage (HECM) Program: Mortgage Insurance Premium Rates and Principal Limit Factors

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What are your thoughts? Please leave your input in the Comments section below, and share this post on social media using the Twitter, Facebook and LinkedIn icons at the top of this page. Thank you!

 

A Convenient Scapegoat



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“If it bleeds it leads”. This phrase gives the general public a peek behind the curtain of print and television journalism’s choice of what’s ‘news’ and how it is presented (slanted). Fear-based news has become even more profitable with the advent of online news sites seeking salacious headlines using fear to garner more clicks, site traffic and ultimately advertising dollars. The Washington Post’s recent article, “More seniors are taking loans against their homes- and it’s costing them” is actually more fair-minded than the headline, yet overlooks one most important caveat.

reverse mortgage newsAny senior who is displaced from their home can fairly be described as a true American tragedy, each warranting an examination of the underlying unique causes that ultimately led to foreclosure. Truthfully, some reverse mortgages should have never been written for seniors who would unlikely be able to afford to make the required ongoing property payments for taxes and homeowner’s insurance. Those at greatest risk of future foreclosure often had little existing income, a history of poor money management, and no limitations on how quickly they exhausted their available loan proceeds. I recall the sense of dread and frustration that washed over me years ago as I pulled up to my applicant’s home only to see a newly-purchased RV in the driveway. The loan had not even funded and substantial hurdles remained.

“Tens of thousands of troubled loans remain. More than 18 percent of reverse mortgage loans taken out from 2009 to June 2016 are expected to go into default because of unpaid taxes and insurance, according to the HUD report”, the Post dutifully reports. With this in mind, it should come as no surprise that HUD may have intentionally shifted the Home Equity Conversion Mortgage further from the cash-strapped ‘needs-based-borrower’ and into the hands of the more affluent borrower with the Financial Assessment.  In fact a recent report from HECM counselors confirms that fewer needs-based borrowers are entering counseling. With mounting projected losses from technical defaults there was little choice but the rein in default rates and payouts from FHA’s insurance fund which backs HECM loans.

While well-researched the Post’s article fails to mention one key detail, both traditional mortgage and reverse mortgage loans require the borrower to keep their property taxes and insurance paid up or risk the ensuing foreclosure and displacement from the home. In this respect, the reverse mortgage has become the all to convenient scapegoat for the financial woes of senior homeowners facing a loan default.

A number of factors can contribute to HECM borrower’s losing their home due to nonpayment of property obligations.

  • Spendthrifts. Homeowners who quickly spend the money they’ve never had before, not considering the future financial impact and risks.
  • Bad habits. A significant number of seniors who took a reverse mortgage needed one to bail them out of a financial mess. Bad habits and poor financial decision making do not stop once they get a reverse mortgage.
  • Suitability. Before the Financial Assessment, many older homeowners only postponed the foreclosure of their home refinancing their existing mortgage, with little residual cash flow remaining after the elimination of monthly mortgage payments. A short term solution with an unhappy ending.
  • Financial abuse. The inconvenient truth is the vast majority of financial crimes committed against elders are done by the adult children and relatives of the borrower.  There are many documented cases of children or caregivers misusing funds intended to pay taxes and insurance.
  • Financial Shocks: Despite the best-laid plans, the unexpected death of a spouse or a medical crisis can sink the financial ship of even the most cautious HECM borrower.

Despite the claims of false advertising, it is true that a reverse mortgage allows borrowers to remain in their home without ever making another payment- mortgage payment that is. That said, the new requirements of disclosing required property charge payments (something traditional mortgages should disclose), the Financial Assessment, and the move toward more affluent borrowers have already dramatically reduced the number of HECM defaults.

Until the risky loans of yesteryear are terminated, the reverse mortgage may remain a tempting scapegoat of mortgage lending in eyes of the media. Just be sure to remind them of what Paul Harvey so famously said was ‘the rest of the story’.

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What are your thoughts? Please leave your input in the Comments section below, and share this post on social media using the Twitter, Facebook and LinkedIn icons at the top of this page. Thank you!

Retirement planning requires a solution-based approach

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“It’s ironic that the biggest source of wealth is locked up in bricks & mortar…”

equity-lockedWhile more financial professionals are embracing the HECM, ironically our cousins across the pond seem to better grasp the concept of home equity management and its role in funding retirement. Is today’s choice of retirement investment vehicles adequate to meet the needs of today’s savers and retirees?  Can asset management live up to it’s name without including a retiree’s largest tangible investment?

Hedgeweek is a blog for hedge fund managers and institutional investors…the big players. Moving in the deep waters of asset management, their recent post recognizes challenges similar to those faced by American retirees seeking to fund retirement. Beyond a lack of saving, individual investors are stymied with a choice of investment products that may not meet their needs.
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10 Ways to Get ‘Smarter’


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reverse mortgage news10 ways to get ‘smarter’

  1. Visit new places
  2. Continue your education
  3. Read books
  4. Challenge yourself physically
  5. Play an instrument or learn how to play one
  6. Write or blog
  7. Role play
  8. Teach others
  9. Eat healthful foods
  10. Find interesting people

Clips used under the  Fair Use Act:

  •  “Don’t you want to look at the Grand Canyon” Vacation, (1983)
  • “Im professor Turgeson”. Back to School, (1986)
  • “Just doing my workout”. Anchorman, The Legend of Ron Burgundy (2004)
  • “You play an instrument? -Yeah.” I lLove you Man (2009)
  • “I’m a writer.” The Shining (1980)
  • “Some therapeutic role-playing exercise.” News Radio (1995)
  • “I’m going to teach you.” Young Frankenstein (1974)
  • “Animals at the zoo eat better than me.” Married with Children (1987)
  • “You get to meet lots of interesting people.” The Simpsons (1989)