Reaching out: Why it always works

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HECM Purchase & Realtors

Reaching out – Why it works all the time, 90% of the time
All joking aside, learn why it always works to approach realtors & agents teaching them about the HECM Purchase. Even though we do few purchase loans learn what you can really expect. The results will surprise you.

10 comments

John Oetjens January 23, 2012 at 7:22 am

Good piece! My experience is that in this market there are so many complications that it becomes nearly impossible to bring an rm to close in 30 days or less! Also, so many bank-owned sales seem to cater to cash-only buyers.
That is my Michigan perspective anyway!

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Shannon Hicks January 23, 2012 at 9:27 am

Thank you John. You bring up a good point about the complicated nature of closing a purchase in many cases.

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James E. Veale, CPA, MBT January 23, 2012 at 11:58 am

This is also why many real estate licensees who will actually express their opinion about HECMs and know something about them are reluctant to recommend to seniors that they use this method of financing the purchase. We generally cannot move fast enough to meet the concerns of the real estate licensee. They know the longer the process, the more likely that the buyer or seller will drop out of the transaction. Also the longer it takes, the more they are tied up in the process and the longer it will be until their payday.

Endorsement volumes speak mounds about the acceptance of HECMs for purchase in the residential real estate selling community. The industry needs sales leadership in this regard. That is why we were pleased when Mr. Michael Banner chose to join Security One.

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Terri Shapiro January 23, 2012 at 10:25 pm

When 1 of my past clients relocated the Purchase was just about to roll out but at the end coming out didn’t line up with the escrow on their new house so their kids co signed on conventional then they took out the reverse (the old fashion way). Now I was referred by the same realtor as in my first experience above which was a compliment to me as we worked diligently to put the other thru, and his client is shopping right now after making a decision to stay in her paid off home or downsize and have money in the bank. So wish me luck and I hope it doesn’t take too long to do the purchase as mentioned above comment. How long have we experience with escrow for the purchase? I am in CA San Fernando Valley. Thanks for everyones input. I would appreciate as much input as possible on this subject.

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The_Critic January 31, 2012 at 11:16 am

You are right. The HECM for purchase is a real game changer as to real estate salespeople listening to what we have to say. Showing them it works is the best way for them to understand a HECM.

Be sure to sell your accomplishment to the competitors of the company you just did one for. They will be the most interested people of all.

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James E. Veale, CPA, MBT January 31, 2012 at 11:32 am

Ms. Shapiro,

It is very bothering to read your comment on the senior having money in the bank.

There is no doubt you understand the basic purpose of the HECM for purchase and that was to avoid duplicate upfront and closing costs but it seems that somehow when it comes to use of proceeds most originators think of it as something which should only be done as a fixed rate HECM.

A HECM for purchase should rarely be a fixed rate HECM from a financial point of view unless almost all proceeds must be used to close the transaction meaning the senior has few other resources to close the acquisition. First the senior is paying interest and MIP for money in the bank. Does that make financial sense? Second, if their purpose is to avoid running out of money, why put the money into a taxable interest earning bank account when they can leave it in a line of credit where the the available cash will usually grow at a higher rate?

Most originators want to believe that only fixed rate HECMs make sense in the purchase transaction. The fact is if the senior will have excess cash in the bank, it rarely does. Why would excess cash not make sense in the refi transaction but make sense in the purchase transaction? Yes, it is a great way to sell a HECM but it generally is not in the best interests of the senior.

Fixed rate HECMs should make sense to the originator because of its higher comp but that does not mean it is the right answer for the senior.

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Jim Snypes January 24, 2012 at 7:35 am

One thing you may want to look for is Realtors with the Senior Real Estate Specialist designation. I have found that they are very receptive to learning more about the HECM purchase.

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Bill January 25, 2012 at 6:41 am

I am excited to share the fact that I just closed my first Reverse for Purchase. I would like to add that it took over 8 months to close this loan because I first had to get the condo complex FHA approved. Not an easy task today.
But the application process was less than 60 days and all partys involved were willing to wait. The net result was a very happy senior and a group of realtors that now know that this type of purchase is real and they are talking about it.

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Jeff Garcia January 26, 2012 at 3:00 pm

I’ve completed approximately 12 RM for Purchase transactions. My advice is to have the buyer name escrow so that you can select an escrow company who is familiar with the process and always get 60 days escrow. You will need to speak with both realtors upfront about the fact that the seller will need to cure almost everything called out in the home inspection as well as all of the items called out in the appraisal.

If you really like challenges, go for an RM MH purchase!

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James E. Veale, CPA, MBT January 31, 2012 at 11:10 am

Jeff,

Are you referring to a new manufactured home or a resale?

Reply

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