July-Aug 2020

Talking Heads to qualify. You can’t do that on reverse, which seems counterproductive since that’s what we’re trying to do is reduce our clients’ monthly outlay. That’s an underwrit- ing issue, not a technology issue, but still worth noting. RM: What kinds of technologies would you like to see adopted to help automate the reverse mortgage process? LM: We need to be able to talk to borrowers with the technology they use. They need to be able to work on their iPads, or whatever technology they are comfort- able with. We need to broaden our knowledge of what technologies seniors are using and gear that to what our industry needs to be doing. Then, from the processing standpoint, we need automated underwriting. I should be able to run a loan through automated underwriting and know whether it passes Financial Assessment. There’s no such animal now, at least not for third-party origina- tors. It’s more than just technology. We need to be able to have a better system for second appraisals than what is currently in place, and we need the changes to current guidelines to allow payoff of debt to qualify. If we want builders to use reverse mortgages, we also need to change the ruling that only allows an appraisal to be done when the property is as is. RM: Is automated underwriting possible in a Financial Assessment world, or is there too much hands-on anal- ysis that must go into each borrower’s financial history? LM: It is possible. Automated underwriting goes through your information and generates a loan decision based on a variety of factors: credit scores, income and monthly debt payments. Financial Assessment is about ratios and credit repayment. We have automated under- writing for VA loans, which works on residual income. Why wouldn’t we have automated underwriting then for reverse mortgages? We should also be able to automate the appraisal review process. Currently, an appraisal comes to us, we ship it to our investor, the investor sends it to HUD, and HUD runs it through collateral risk assessment. I can pretty much tell you what’s going to fail: properties in rural areas, proper- ties in communities where nobody is selling and properties that are quite literally in the middle of nowhere. I’d like a technology that allows me to run the analysis, because HUD takes two to three days to respond. If I am in rural Tennessee, it’s going to take time to get a second appraisal. I’d rather skip that step. I look at the appraisal, I should be able to run it thru a system and find out if I need a second appraisal. Fannie and Freddie use a similar approach, but they rarely require second appraisals. Instead, they have a desk review. That would save our customers money and time and create a better experience. I know collateral risk assessment is new, but I feel if we don’t have these conver- sations then we’re never going to get anywhere. RM: What about the proprietary market? Surely, those investors have the potential to be more flexible? LM: Yes, proprietary investors are easier to work with. Proprietary reverse mortgages are heavily modeled after things that HUD requires on Home Equity Conversion Mortgages (HECMs). There are only a few places where they are tweaked differently. The fact remains that HECMs still account for the vast majority of reverse mortgages, so that’s why I’d like to see HUD allow for more innovation on the technology side. RM: We’ve seen more and more forward mortgage companies expand into reverse. Tell us more about loanDepot’s plans. LM: We had a lot of things that we needed to do first before we could put our focus on reverse. We started by launching a training program in September 2019 and now have 70 loan officers across the country who can write reverse mortgages. We are creating a separate pro- cessing team that will only process reverse mortgages. We are doing it the right way by making sure our loan officers are well-trained in the reverse product to bet- ter serve our customers. We need to make this product easier for consumers to understand. Though it’s getting better, advertising is still presented in such a way that confuses consumers. That’s where my loan officers come in. They are taught to teach the benefits and to correct general information they may have received from the media or a friend and make it more specific to them. That’s why we spend so much time on training, because it is relationship-based lending. Talking Heads continued from page 13 14 REVERSE MORTGAGE / JULY-AUGUST 2020