INSIDE: Secondary Market Matures Services, Products Offer Equity Release Options www.nrmlaonline.org P. 24 P. 28 The official magazine of the National Reverse Mortgage Lenders Association January-February 2022 Volume 15, No. 1 Private-Label Products Examined Industry Experts Explain Support for HECM Alternatives
For industry professionals only - not intended for consumers. American Advisors Group, NMLS #9392 (www.nmlsconsumeraccess.org), headquartered at 18200 Von Karman Ave., Suite 300, Irvine, CA 92612. This material is not from HUD or the FHA and was not approved by HUD or a government agency. License information can be viewed on: www.aag.com/disclosure. LET AAG BEYOUR SUREHANDED PARTNER! Being the best in your field requires perfect handoffs. (866) 964-1109 | aag.com/wholesale
PUBLISHER Peter Bell pbell@dworbell.com SENIOR EDITOR Thomas A. Barstow thomas.barstow@theYGSgroup.com ASSOCIATE EDITOR Darryl Hicks dhicks@dworbell.com MANAGING EDITOR Sam Hoffmeister samuel.hoffmeister@theYGSgroup.com MANAGING EDITOR, DWORBELL INC. Jessica Hoefer PRESIDENT Stephen Irwin NRMLA EXECUTIVE COMMITTEE CO-CHAIRS Scott Norman, Finance of America Reverse Michael Kent, PHH Mortgage Corp. dba Liberty Reverse Mortgage DESIGNER Tara Roth ADVERTISING SALES Natalie Matter Bellis natalie.matterbellis@theYGSgroup.com Reverse Mortgage is the official publication of the National Reverse Mortgage Lenders Association. The magazine is published every two months. For inquiries regarding association membership and/or magazine subscriptions, please call Darryl Hicks at 202-939-1784. Advertising and editorial inquiries should be directed to Max Lalwani (max.lalwani@theYGSgroup.com) and Sam Hoffmeister (samuel.hoffmeister@theYGSgroup.com), respectively. Association & Subscription Contact: National Reverse Mortgage Lenders Association 1400 16th St., NW, Suite 420 Washington, DC 20036 202-939-1760 lross@dworbell.com Industry: www.nrmlaonline.org Consumers: www.reversemortgage.org Advertising & Editorial Contact: National Reverse Mortgage Lenders Association 1400 16th St., NW, Suite 420 Washington, DC 20036 202-939-1760 ©2021 National Reverse Mortgage Lenders Association January-February 2022 Volume 15, No. 1 Contents From the Top Paul Fiore, Chief Retail Sales Officer, American Advisors Group By Darryl Hicks 10 Those We Help Reverse mortgage supplements Ohio woman’s income By Darryl Hicks 32 Features 18 Private-Label Products Examined Industry experts explain support for HECM alternatives By Joel Berg 24 Secondary Market Matures Investors notice reverse mortgage benefits By Joel Berg 28 Services, Products Offer Equity Release Options For when reverse mortgages might not work for your clients By Thomas A. Barstow Columns 3 In Reverse Ingenuity drives reverse mortgages forward By Thomas A. Barstow 4 Steve Irwin: Moving Forward Customer trust and satisfaction are foundations to our future 6 Board Room Going beyond HECMs requires imagination By Scott Norman Departments 2 Scribes Meet this month’s contributors 7 What’s News Get up to date on the industry, the press and Washington, DC 34 Member News/Who’s Who in Reverse 36 Numbers A closer look at Americans’ attitudes toward finances CRMP: Across the Kitchen Table A chat with Angella Conrard of C2 Financial Corp. By M. Diane McCormick 14
Thomas A. Barstow (In Reverse, p. 3, and Services, Products Offer Equity Release Options, p. 28) is the senior editor for Reverse Mortgage magazine. Barstow has had a 36-year career in journalism that includes being a reporter, writer or editor in Maryland, North Carolina, Pennsylvania and New York. He currently teaches journalism at Gettysburg College and writes for various business publications. He is a former president of the Pennsylvania Society of News Editors and a former president of the Associated Press Media Editors in Pennsylvania. Joel Berg (Private-Label Products Examined, p. 18, and Secondary Market Matures, p. 24) has been a B2B reporter and editor for more than 20 years, both in-house and freelance, covering finance, healthcare, environmental regulation and general business news for local, regional and national publications. Most recently, he was editor of the Central Penn Business Journal and Lehigh Valley Business in Pennsylvania. He also taught writing and communications at York College, Millersville University, Gettysburg College and Harrisburg University. Darryl Hicks (From the Top, p. 10, and Those We Help, p. 32) joined NRMLA in May 1999 and currently serves as vice president, communications. Hicks writes the Weekly Report newsletter, administers NRMLA’s social media accounts and websites and manages the CRMP designation. Steve Irwin (Moving Forward, p. 4), president of NRMLA, oversees the association’s initiatives to serve as an educational resource, policy advocate and public affairs center for consumers, lenders and related professionals. His background includes experience with strategic planning, organizational design, portfolio acquisition, risk management and quality control. He received his B.A. from Grinnell College and his MBA from the University of San Francisco. M. Diane McCormick (CRMP: Across the Kitchen Table, p. 14) is a freelance journalist and former legislative press secretary. She covers issues involving a variety of national business associations, as well as basic and higher education. Her 2017 book, Well-Behaved Taverns Seldom Make History, explores Pennsylvania pubs where rabble-rousers stirred up trouble, from the American Revolution to Prohibition. Scott Norman (Board Room, p. 6) has had a 28-year career as a mortgage banker. He led the original campaign to amend the Texas Constitution to authorize reverse mortgages in the state in 1999, when he founded the Texas Association of Reverse Mortgage Lenders. He later closed the first reverse mortgage loan in Texas. Norman has testified numerous times before state legislatures to help craft legislation to protect senior homeowners around the country. He got his start in the mortgage business in Austin in 1993, later becoming president of the Austin Mortgage Bankers Association. Norman is the vice president of field retail and government relations at Finance of America Reverse, and he serves as co-chair of NRMLA’s board of directors for the 2021–2022 term. Scribes Meet This Month’s Contributors Financing Seniors’ Independence ServingUtah and Idaho for Over 20Years We opened our doors in 1999 to provide local homeowners and those wishing to be homeowners good quality mortgage loans with no hidden surprises or costs. We pride ourselves on being customer oriented and find loans that are tailor made for our clients. We added the reverse mortgage loan to our great line of product offerings and have been providing the people of Utah and Idaho this loan as another mortgage available to meet whatever financial need arises. We continue to remain committed to our clients’ mortgage financing needs, and our variety of all residential mortgage loan products makes us a great company to add to your network of professionals. FSI Mortgage Independence Square 111 East 5600 South • Suite 102 Murray, UT 84107 • NMLS #4398 www.fsimortgage.net 1-800-808-3066 2 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
In Reverse Ingenuity Drives Reverse Mortgages Forward By Thomas A. Barstow IN THIS FIRST edition of Reverse Mortgage magazine for 2022, we continue with the theme from the last issue of offering articles that discuss where the industry is heading. Industry leaders keep adapting as the times change, and that ingenuity propels the reverse mortgage marketplace ahead. To that end, the cover story focuses on private-label reverse mortgages. The creators of private-label reverse mortgages—what we used to refer to as proprietary reverse mortgages—continue to tweak their products as consumers divulge changing needs. This year, more innovations can be expected, as Joel Berg outlines in, Private-Label Products Examined (p. 18). For example, Mike Kent, president of Liberty Reverse Mortgage, foresees the products being used for second homes. Meanwhile, the push continues to get loan originators in the forward mortgage space to add reverse mortgages to their product mix. Jonathan Scarpati, vice president of wholesale lending for Finance of America Reverse, points out that supplementing product offerings only makes sense. Clients who got a forward mortgage years ago might now be in a position where a reverse mortgage meets new demands and desires, especially after nearly two years into a pandemic that has many people re-evaluating financial plans and wanting to live life to the fullest. Loan officers must understand those changes and then have the expertise to offer solutions. Industry leaders have been developing programs to get newcomers up to speed, as you will see in the cover feature sidebar, Teaching LoanOriginators HowReverseMortgagesWork (p. 22). Kimberly Smith, senior vice president of wholesale lending for AAG, is among the experts who discuss what her company is doing on this education front. When loan originators can see the “big picture,” Smith tells Berg, they listen. Investors are taking notice of the successes in the Home Equity Conversion Mortgage (HECM) market, and the secondary market to securitize those loans is becoming increasingly robust. That interest has been extending to the private label market. Secondary Market Matures (p. 24) examines some of those trends. We also have a feature in this edition where we discuss alternative equity release products that could help some clients, even though loan officers might not financially benefit. Those services and products include room-sharing services, sale-leaseback deals and equity-sharing products and are discussed in Services, Products Offer Equity Release Options (p. 28). This overview is an effort to continually introduce loan officers to the concept that they might benefit if they become mortgage planners and consultants, rather than merely professionals who sell reverse mortgages. Scott Norman, vice president of field retail and government relations at Finance of America Reverse, provides insights into the big picture in his Board Room column (p. 6). “We as an industry need to educate consumers about how the universe has shifted, so they can be aware of the changes to life. I don’t want to see Americans just endure in retirement, but truly enjoy retirement,” Norman writes. “The new retirement will be not only about expanding our reverse mortgage product lines, but also expanding borrowers’ imagination of what their older years will really require.” REVERSE MORTGAGE / JANUARY-FEBRUARY 2022 3
Moving Forward Customer Trust and Satisfaction Are Foundations to Our Future Challenges Create Opportunities to Keep Evolving By Steve Irwin, President, NRMLA “We don’t think ourselves into a new way of acting. We act ourselves into a new way of thinking.” —Larry Bossidy, Execution: The Discipline of Getting Things Done GIVEN THE CURRENT demographic realities, it is becoming increasingly evident that older homeowners will need to have financing solutions that not only meet their current needs, but that they also have safe and reliable options as their needs evolve over time. Yes, our reverse mortgage market is continually innovating, but we must ensure that we support borrowers, and their trusted advisers, so that their best interests are being served over time. We must work toward creating a tremendously positive experience throughout the entire lifecycle of the product. We must look to new and exciting products that move beyond the Home Equity Conversion Mortgage (HECM) and levels of service delivery that go well beyond customer expectations. When considering our market, I often recollect a lecture I attended by the late Oren Harrari. He warned of the dangers of finding too much comfort in the status quo. This comfort “causes managers to tenaciously cling to the geese that laid yesterday’s golden eggs, even as the geese are reaching the end of their life cycle.” Our industry’s evolution, and ultimate success, must be built on establishing customer trust and satisfaction as those very customers’ needs and wants continually change. New products and new product enhancements must always be front of mind. The opportunities for growth are before us all, but it will take constant reinvention to find services and products that truly add the necessary value for the customers of the future. These are the lessons that continue to be obvious during the pandemic, and they will still be obvious as we face tomorrow’s challenges. It’s time to think beyond the HECM and beyond the customer of today. Just as importantly, we also need to carefully consider how today’s customers may have changing needs. How prepared are we to continually add value to the current customer base? These are daunting challenges, but our members and our leadership have faced tremendous challenges before. I suggest we all are up to these new challenges. We are well able to anticipate, create, evolve and execute. We can get this done. Steve Irwin 4 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
MAKE 2022 YOUR BEST YEAR BY FAR For business and professional use only. Not for consumer distribution. ©2022 Finance of America Reverse LLC is licensed nationwide | Equal Housing Opportunity | NMLS ID # 2285 (www.nmlsconsumeraccess.org) | 8023 East 63rd Place, Suite 700 | Tulsa, OK 74133 | AZ Mortgage Banker License #0921300 | Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act | Georgia Residential Mortgage Licensee #23647 | Kansas Licensed Mortgage Company | Massachusetts Lender/Broker License MC2285: Finance of America Reverse LLC | Licensed by the N.J. Department of Banking and Insurance | Licensed Mortgage Banker -- NYS Banking Department where Finance of America Reverse is known as FAReverse LLC in lieu of true name Finance of America Reverse LLC | Rhode Island Licensed Lender | Not all products and options are available in all states | Terms subject to change without notice | For licensing information go to: www.nmlsconsumeraccess.org First-to-market product innovation A ligned with your goals and invested in your success R etirement and pre-tirement experts Level Up Your 2022 Reverse Plan Email us at levelup@fareverse.com or visit us at FARwholesale.com.
Going Beyond HECMs Requires Imagination We Must Reframe Retirement Discussions By Scott Norman IT’S EXPENSIVE TO grow old in America. In our lifetime, regardless of cost-of-living adjustments or policy changes out of Washington, it will undoubtedly continue to become more expensive for many Americans to afford to retire. To make matters worse, the U.S. population is aging at such a rate that, within a few years, older Americans will outnumber the country’s children for the first time. Rising costs of health and nursing care, as well as other living costs, will only make the retirement years, for some, the most heartbreaking and unclear years of their lives. It doesn’t need to be that way. As we look beyond Home Equity Conversion Mortgages (HECMs) to the future of retirement in America, I can envision a time when lenders originate 250,000 reverse mortgages a year. However, before that comes to fruition, we as an industry need to harness all the imagination, persistence and education we can if we are going to expand the overall discussion. Retirement plans must shift from managing account balances to helping individuals think about when they plan to retire and howmuch income they will need in retirement. A paradigm shift must occur, moving away from a myopic focus on wealth accumulation to the more important longterm goal of generating and protecting lifetime income. There is an assumption of predictability around retirement that is doing great harm, as we all know retirement is anything but predictable. Yet, in the U.S., workers are being asked to take responsibility for their financial well-being in retirement now more than ever—without being asked to consider how long they will live in retirement. Social Security and employer- provided pensions used to be the foundation for building a secure retirement. That system has been weakening for decades as traditional pension plans have been replaced by a system of savings, like a 401(k), which was meant to supplement and not replace traditional pensions. Most employers today offer defined contribution plans to their workers as the primary—and often sole—retirement program. While all of this is great, it is indeed missing the bigger picture. Our goal in the reverse industry should not be to sell one more loan next month—it should be about changing how people think about funding and living in retirement. The challenge is that most people don’t believe retirement will be overly challenging or erratic. We need to reframe that discussion. Changing Americans’ awareness around what retirement really looks like and requires is, in fact, a necessary prologue to any discussion about getting more borrowers to embrace non-traditional financial tools. We as an industry need to educate consumers about how the universe has shifted, so they can be aware of the changes to life. I don’t want to see Americans just endure in retirement, but truly enjoy retirement. The new retirement will be not only about expanding our reverse mortgage product lines, but also expanding borrowers’ imaginations of what their older years will really require. Board Room Scott Norman 6 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
EVERYTHING NEW YOU NEED TO KNOW People are talking about ... FHA Drafts New HECM Handbook The Federal Housing Administration (FHA) drafted new sections in its Single-Family Housing Policy Handbook 4000.1 that consolidated approximately 150 Mortgagee Letters and other policy documents that are currently used by mortgagees when originating or servicing Home Equity Conversion Mortgages (HECMs). The posting was a continuation of the FHA’s progress toward a consolidated, authoritative Handbook 4000.1 that will make it easier to do business with FHA. When the final version is eventually published, the HECM origination through servicing sections will provide mortgagees, servicers, appraisers and other stakeholders with a comprehensive policy resource and replace existing HECM guidance. Learn more at bit.ly/3pNoT5L. Senior Housing Wealth Exceeds Record Homeowners 62 and older saw their housing wealth grow by 3.7 percent or $339 billion in the second quarter to a record $9.57 trillion from Q1 2021, according to the latest quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI). The RMMI rose in Q2 2021 to 334.71, another alltime high since the index was first published in 2000. The increase in older homeowners’ wealth was mainly driven by an estimated 3.4 percent or $381 billion increase in home values, offset by a 2.2 percent or $42 billion increase in senior-held mortgage debt. U.S. Drops in Global Retirement Rankings The United States slipped one spot to No. 17 among developed nations in the 2021 Global Retirement Index (GRI) released in mid-September by Natixis Investment Managers (Natixis IM). The ninth annual index, a snapshot of the relative financial security of retirees in 44 countries, shows that many Americans feel that their retirement dreams are slipping away, notably as a result of the macro-economic consequences of the COVID-19 pandemic, including increased government debt, rising inflation and persistently low interest rates, according to Natixis IM. Highlights: • The U.S. dropped one place from last year with lower scores in health, happiness and government debt and a higher ratio of retirees to workers. Iceland ranked No. 1 for a third consecutive year; • Three-quarters (77 percent) of Americans surveyed by Natixis IM think that rising government debt will lead to reduced Social Security benefits, making it harder for them to make ends meet in retirement; • Four in ten say, “It’s going to take a miracle” to retire securely, because COVID-19 made it more difficult. Read the full report at bit.ly/3El8Xvh. Study: One-Third of Retirees Can’t Afford Long-Term Care In the second of a three-part series, an Issue Brief published in September by the Center for Retirement Research at Boston College concluded that about onethird of retirees do not have the resources to afford even minimal long-term services and supports (LTSS) and only about one-fifth could cover severe needs. A growing concern is whether retirees will be able to meet future needs for long-term care without exhausting their resources. The first brief concluded that about 20 percent of retirees will escape the need for LTSS and 80 percent will need at least a year of part-time support—with around a quarter requiring full-time support for several years. “The results show that about a quarter of retirees can cover severe care needs for at least five years using income, financial assets and informal caregivers. At the other extreme, about one-quarter of individuals cannot afford What’s News continued on page 8 What’s News REVERSE MORTGAGE / JANUARY-FEBRUARY 2022 7
even minimal care needs. The remaining 47 percent of individuals lie somewhere in between,” says the Issue Brief. Not surprisingly, those who are married, better educated and white have more resources for long-term care. Read the full brief at bit.ly/3nQB9zR. Congratulations New CRMPS NRMLA congratulates the following individuals for earning the Certified Reverse Mortgage Professional (CRMP) designation: • Mitchell Cooper, Mutual of Omaha Mortgage, Auburn, CA; • Nancy Ferreira, C2 Financial Corporation, San Diego, CA; • Stephen Parnell, New Florida Mortgage, Palm Beach Gardens, FL; • Keith Morgan, Mutual of Omaha Mortgage, Pleasant Grove, UT; and • Stephen Hoff, C2 Financial Corp., Encinitas, CA. Welcome, New Members NRMLA welcomes our newest members: • PCL Financial Group, based in Westlake Village, CA; • RoundPoint Mortgage Servicing Corporation, based in Fort Mill, SC; • South River Mortgage, based in Annapolis, MD; • Draper & Kramer, Metairie, LA; and • BlackFin Group, Englewood, CO. The press is talking about ... CPA: Consider Reverse Mortgage at 62 In a guest column published by theStreet.com, CPA Robert Klein recommends reverse mortgages as a proven retirement strategy beginning at age 62. “All homeowners aged 62 or older with or without a mortgage should evaluate a potential HECM for its ability to provide unrestricted access to an increasing tax-free line of credit without the downsides of a home equity line of credit, or HELOC,” says Klein. “When implemented early and used strategically to unlock illiquid home equity, a HECM reverse mortgage can be used to increase after-tax cash flow at opportune times throughout retirement while providing peace of mind.” Other options include deferring Social Security, reducing Medicare Part B and D premiums, implementing a multi-year, staged Roth IRA conversion strategy and locking in sustainable and potentially tax-favored lifetime income through the purchase of a deferred or immediate fixed- income annuity. Read the article at bit.ly/2ZoqAv6. Motley Fool Article Reviews Reverse Mortgages The Motley Fool published a comprehensive article about reverse mortgages that includes links to NRMLA’s consumer website and consumer guides. The article covers eligibility requirements, costs, product options, pros and cons and how to avoid scams. “If you’re a senior homeowner with a lot of equity in your home, it could be an easy way to borrow,” says the article. “Just be aware of the drawbacks before moving forward. You may decide that you’re better off with a home equity loan or line of credit than a reverse mortgage. Or you may decide that the cost of owning your existing home is too high, even with those reverse mortgage payments. Read the full article at bit.ly/2XSM6YA. In Washington, they’re talking about ... CFPB Issues Joint Statement on Discontinuing LIBOR The Consumer Financial Protection Bureau (CFPB) joined four other federal financial regulatory agencies and state bank and credit union regulators in issuing a statement on Oct. 22 highlighting the risks posed by the discontinuation of the London Interbank Offered Rate (LIBOR). The interagency statement identifies specific actions financial institutions can consider in preparation for the elimination of LIBOR-based loans. Those actions What’s News continued from page 7 8 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
include developing and implementing a transition plan for communicating with consumers and including fallback language that defines a fallback reference rate. Finally, the interagency statement includes clarification on the meaning of certain key terms, factors industry should consider when selecting alternative rates and expectations for fallback language. On June 4, 2020, the CFPB issued a Notice of Proposed Rulemaking and FAQs relating to the LIBOR transition. The CFPB is continuing work on a final rule to address the anticipated expiration of LIBOR and expects to issue it in January 2022. The FAQs pertain to compliance with existing CFPB regulations for consumer financial products and services impacted by the anticipated LIBOR discontinuation and resulting need to transition to other indices. Read the joint statement at bit.ly/3vNm8C8. Senate Advances Chopra Nomination By a vote of 50 to 48, the Senate on October 1 approved the nomination of Rohit Chopra to be director of the Consumer Financial Protection Bureau (CFPB) for a five-year term. Chopra has served since 2018 on the Federal Trade Commission, but he also has prior experience at the CFPB, which he joined in 2011 to investigate industry abuses in the student lending market. At his confirmation hearing in March 2021, Chopra told Senate lawmakers that, as head of the CFPB, he would fight for consumers who are struggling with debt as the pandemic stretches on and would work to protect them from potential abuses by lenders or threats to data privacy. Ginnie Mae Has a New President The Senate confirmed Alanna McCargo as the next president of Ginnie Mae. McCargo, who had served as senior advisor for housing finance at the Department of Housing and Urban Development, was confirmed by voice vote on December 14. McCargo’s career in housing spans decades and has centered on how America’s housing finance system can equitably provide credit and capital to households and affordable housing stakeholders. She previously served as vice president of the Housing Finance Policy Center at the Urban Institute in Washington, DC. Ted Tozer served as the last permanent president and resigned in 2017. Michael Bright served as interim president from 2017 to 2019. “NRMLA commends the Senate for confirming Alanna McCargo as the next president of GinnieMae,” saidNRMLA President Steve Irwin. “It has been more than four years since Ginnie Mae last had a permanent president, so her confirmation comes at a critical time when we need someone with solid leadership skills and a keen understanding of the public/ private nature of the HECM program at the helm. We look forward to working with Alanna and her management team in the coming year on important HMBS issues.” Important HECM News From HUD The Department of Housing and Urban Development (HUD) made several important announcements the week of September 16 that impact the Home Equity Conversion Mortgage (HECM) program. Here are the highlights. HUD published a Notice of Funding Opportunity that provides $51 million in grants to support counseling activities in the coming year. Counseling agencies that offer HECM default counseling will receive priority points when HUD decides who gets grant funds and how much. Counseling agencies had until Oct. 14, 2021, to submit their applications. The Federal Housing Administration (FHA) announced in Mortgagee Letter (ML) 2021-23 that mortgagees can now submit appraisals for reverse mortgage endorsements through the FHA Catalyst: EADModule. While the system is available immediately, it becomes mandatory onMarch 14, 2022. Cases submitted through the legacy EAD portal prior to March 14, 2022, may continue to be delivered through the old system until April 15, 2022. Several key staff appointments were announced, including Mia Pittman, deputy assistant secretary for risk management and regulatory affairs, FHA; Nathan Shultz, senior adviser, Office of Housing, FHA; and Brad Pollock, special assistant, Office of Policy Development and Research. And now you’re up to date. Let us know what you’re talking about. This forum is the place for readers to share their opinions with fellow colleagues about the direction of the reverse mortgage business and other retirement trends. Submissions should be limited to 100 words or fewer and submitted to Associate Editor Darryl Hicks, at dhicks@dworbell.com. Alanna McCargo REVERSE MORTGAGE / JANUARY-FEBRUARY 2022 9
FOR ALMOST 18 years, Paul Fiore has distinguished himself as one of the reverse mortgage industry’s top sales executives. He got his start with Long Island-based Senior Lending Network/World Alliance Financial and was part of the team that devised the hugely successful commercials featuring veteran actor Robert Wagner. In 2009, he joined American Advisors Group and helped transform the Orange County-based corporation into the largest retail originator in the industry, thanks largely to AAG’s commercials featuring the late Fred Thompson and his successor, Tom Selleck. Today, he oversees more than 300 people who originate loans out in the field and in three regional call centers. Reverse Mortgage magazine sat down with Fiori to learn how the past year has impacted his sales approach and to learn more about what it takes to be successful at originating reverse mortgages. Reverse Mortgage: What has the past year taught you in terms of how reverse mortgages should be presented and sold? Paul Fiore: A consistent and repeatable sales process is key to successfully selling reverse mortgages. When you get put into a remote work environment, there’s a risk that salespeople will operate independently and do things that are not consistent with what you teach. We doubled down on sales trainers. They listened to loan originators’ phone calls. They provided one-on-one coaching. The sales process is very much a consultative approach that allows you to understand whether you’re dealing with a needs-based or wants-based consumer. That has been the number one thing that I noticed over this past year, which has led to record levels of performance. Even new people, who have come into the organization during COVID, are producing at levels on an individual basis like I’ve never seen. The common thread is a consistent sales process and, obviously, phenomenal listening skills. Those are extremely important. RM: What were the top reasons homeowners sought a reverse mortgage from AAG in 2021? PF: This may be a COVID mindset, but we’ve seen more people establishing a line of credit as part of their Paul Fiore Paul Fiore, Chief Retail Sales Officer, American Advisors Group By Darryl Hicks From the Top 10 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
From the Top continued on page 12 retirement plan or “rainy day” fund. People are still using reverse mortgages for home modifications and improvements. It has leveled off a little bit, but we had a good number of people early in the year refinancing when rates were really low, and they wanted to take advantage of home appreciation. We still see people who are paying down high-interest credit card debt or getting rid of their mortgage payment. Because COVID hit the senior demographic so hard, it made people reassess where they were financially. COVID became a real-life example of, when you’re dealing with something unexpected, how prepared are you? I think the reverse mortgage, as a tool to help people be prepared, has become more of an actual solution than prior to COVID. RM: Like many lenders, AAG has educated financial planners, CPAs and others that home equity should be viewed more strategically in retirement plans. What impact have these efforts had on AAG’s business and client base? PF: I’ve talked to my own friends who are financial planners and many of them don’t have the tools to analyze a reverse mortgage as part of a retirement strategy. They often refer people over to a reverse mortgage company, so we can see where it fits. On our field sales side, which Jesse Allen oversees, we are seeing more affluent consumers coming through that channel. On the call center side, I am now seeing nearly a 50/50 split of “needs” versus “wants” borrowers with most of the latter tending to be more affluent homeowners who want to use a reverse mortgage strategically as part of a way to add to their asset pool. RM: Has the average age of your clients dipped? PF: We’re still right around 71 or 72, but when I entered the business, it was more like 79. Over the last ten years, it has steadily come down. These are interesting times. FHA loan limits continue to grow. There are more proprietary products in the marketplace, and many of them are featuring lower age restrictions below 62. These factors are all driving younger homeowners to seek a reverse mortgage. This is all good. A lot more people turning 62 want to be unburdened by massive financial responsibility, and the more tools that are available to help them achieve those goals is a plus. From the Top REVERSE MORTGAGE / JANUARY-FEBRUARY 2022 11
RM: If you look at AAG’s top-producing originators, what common qualities do they have? PF: Your top producers are super consistent; they’re dedicated to what they’re doing; they can tune out outside distractions; and they have a tunnel-vision mindset. Working from home amplifies it even more. Our top producers have improved because they’re at home in front of their computer. There are no outside distractions, and they are laser-focused. I would add that these people have a passion for helping the customer. It comes through in their conversations. They’re listening intently. They treat every single customer as a unique situation. They could have funded hundreds of reverse mortgages, but that next phone call they take is treated like the most important call they’ve ever taken. When you’re that intentional and focused on the person you’re talking to and you treat them with the respect that they’ve earned and deserved, those conversations stand out for me. Yes, they work harder than most, but when you listen to their phone calls, they’re textbook. They do a ton of listening, and they’re really passionate about what they do. They love their job. RM: Some people are concerned about the high level of refinancing activity going on—that businesses should be doing more to attract new clients to improve market penetration. What are your thoughts? PF: I think it’s a fair concern to a certain degree. As an industry, if we aren’t innovative in our marketing, if we don’t try new things and take chances in our advertising, whether it’s mailers or television, or web-based, you’re not fully reaching out to the consumers who could benefit from a reverse mortgage. There’s a normal ebb and flow to refinance activity, just like on the traditional mortgage side. When rates are low, consumers benefit from refinancing. At AAG, we’re constantly thinking about how we can broaden the message to break through to people who may have preconceived notions about what a reverse mortgage is and what it can be. We want to speak to those customers. All of us benefit by growing the pie. Otherwise, the industry stays extremely niche. We need a provocative message to reach a broader audience. That’s an extremely important part of growing this industry. From the Top From the Top continued from page 11 Nationwide Property Inspections and Preservation Inspections Preservation Insurance Loss Inspections REO Services Violation Management Utility Management Vacant Property Registrations Foreclosure Registrations Special Services Protecting Your Properties. Protecting You. • NFROnline.com • 800-639-2151 12 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
RM: AAG relies heavily on its call centers to qualify and educate prospective borrowers. In today’s digital age, and increasingly tech-savvy Baby Boomer population, are phone sales becoming obsolete? Are you relying more heavily on other technologies to bring your sales force into “virtual” contact with borrowers? PF: It is inevitable that this industry will continue to evolve and that consumers will continue to migrate toward online opportunities and technology. When I first got to AAG, 100 percent of our leads were driven through TV. Now it’s 20 to 25 percent of our overall marketing strategy, because consumers are using all different types of media. I don’t think that changes the actual contact with the consumer. Now you can supplement and enhance your ability to communicate with customers. We see it with Zoom, which allows for face-to-face interactions and is actually an enhancement we didn’t have before. Consumers are good with doing the Zoom conversation. If you look at telecommunications and companies like Verizon, you go onto their website and a chat feature pops up immediately and they start communicating with you. With a reverse mortgage, you could have some version of a chat feature or chat function that ultimately leads to a conversation. I view technology as an enhancement opportunity and not a replacement of actual phone conversations or face-to-face conversations. RM: Are there things you’ve learned about Zoom that you know you’re teaching your salesforce? PF: It can be challenging. You’re trying to make eye contact. You look in the camera, you look at someone’s face on the screen. You also have to think about the appropriate time to have conversations, because it’s not every day that you can just say, “hey, would you like to do a Zoom conversation or a Zoom meeting?” But you’ve been on the phone for only five minutes. There’s a right time and a wrong time to introduce those opportunities. Advanced sales training goes beyond just having really great phone skills. It is definitely evolving. And, by the way, that also goes with your follow-up skills and making sure the conversations are intelligent and you’re not repeating yourself. When I think about the evolution of the sales process, prior to financial assessment, we used a financial worksheet that was a great tool for helping somebody understand where their financial situation was, but, more importantly, what their financial situation would look like with a reverse mortgage. Then financial assessment came into play, which has been great for the industry because it creates a much more consultative sale. But you have to make sure that you’re not just going down line by line and qualifying somebody just for the sake of qualifying them. Utilize every aspect of that financial assessment as part of the broader conversation to understand how somebody is living, trying to visualize what that situation looks like, as opposed to just doing your diligence to try to see if somebody qualifies. Whether you’re having that conversation on the phone, face-to-face or via Zoom, those interactions are some of the most important parts of successful sales with a reverse mortgage these days. RM: What are your business goals for 2022? PF: We’ve had a pretty good run as far as what we’ve been able to build, but, when we take a step back, there’s still so much more that we can do. We talked about it earlier—the idea that we want to grow the pie and reach customers who maybe haven’t previously thought of reverse mortgages but would benefit from them. That’s a big part of our strategy right now—the concept of knowing your customer. We’re going to align very closely with the marketing team, so that we can better understand people who choose not to transact and why. What is it in our messaging that we can evolve and change? The other big piece right now for us is the digital experience. If you look at the forward mortgage side, they’ve got a lot of tools, whereas reverses have tended to be a little bit behind the times. A lot of it is driven by our preconceived notions about how seniors want to interact. But seniors are getting younger, they’re more educated than they’ve ever been, and a lot of them actually appreciate a digital experience and would prefer it in a lot of ways and have maybe fewer conversations on the phone or fewer conversations faceto-face. We’re working a lot on the digital experience. The customer experience is something we should never lose sight of. I want us to provide the best possible customer experience that we can. Sometimes these loans aren’t easy. But how do we make it as easy as possible? How do we make the touch points less painful for consumers in general? How do we streamline our processes and make them as efficient as we can? You see that in a lot of financial service products that are out there in the market. I’ve got many ideas of what we can do with our industry and with our company that could make things a little bit more simplified for consumers. From the Top REVERSE MORTGAGE / JANUARY-FEBRUARY 2022 13
CRMP: Across the Kitchen Table CRMP: Reverse Mortgages Help People Achieve Wellness A Chat With Angella Conrard, CRMP, Reverse Mortgage Advisor, C2 Financial Corp. By M. Diane McCormick ANGELLA CONRARD WAS in her 40s when she faced a crossroads. The self-made businesswoman had one of the first therapeutic neuromuscular massage and physical therapy practices in South Orange County, CA. With the physical demands of the work, she sensed her career winding down when she read a book on a fascinating topic. Fellow Baby Boomers—with long, healthy lives ahead—faced financial insecurity. Then she read a Los Angeles Times story about reverse mortgages, and the puzzle pieces fit perfectly. “That makes sense,” Conrard says. Angella Conrard • 200K+ Reverse Mortgage Closings • Seasoned Professionals • First-Rate Customer Service • TitlePro247 • PRC Fee Calculator • Trust & POA Reviews • 24-Month Tax History • PRC Mobile App • CRMP Credit Course • Curative Work for Old Liens • Fully Integrated with Bay Docs • H4P in AZ, CA, NV & TX (800) 542-4113 PRClosings.com your partner in success! Premier Reverse Closings is a proven industry leader for all of your reverse mortgage title & settlement needs. 14 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
CRMP: Across the Kitchen Table Today, she is a CRMP licensed in seven states, providing reverse mortgages in California, Florida, Washington, Colorado, Oregon, Texas and Idaho. Whether in massage therapy or reverse mortgages, her work has always been “a lifestyle. It’s never been a job.” “I love being of service,” she says. “That’s really what drives me in anything that I do in my life. It’s just fun for me. If I can, I help people. That’s my personality. It’s something that I want to do and need to do, and it’s who I am as a person—a Certified Reverse Mortgage Professional.” To her, reverse mortgages are applied to achieve wellness. “If you’re in pain and you’re not feeling good, it really throws off everything else in your life,” she says. “It’s the same with finances, but they’re at the bottom of the pyramid. It’s really important to have that good foundation. When there is some precariousness there and that foundation is not solid, you don’t feel good in the rest of your life.” Conrard lives in a “small and sleepy” town famous for its world-class surfing, although that is not her thing. She’s a yogini. However, she is not native to the Golden State. She grew up in Minneapolis, moving to Orange County in the mid-1980s to help her parents with a business they founded there. Soon, she acclimated to southern California and founded her first, successful business. When she chose reverse mortgages for her second career, she eased in gradually. She is a perpetual learner. “When I attend meetings, I’m oftentimes in the first couple of rows because I like to pay attention,” she explains. So, she soaked up information from classes, meetings and her NRMLA membership. “I asked a lot of questions and wanted to learn more, and still, I am continually moving with it. The industry changes all the time. You need to be committed to be a good professional and a helpful professional.” Because today’s Baby Boomers are usually familiar with reverse mortgages, initial meetings with potential clients are listening sessions focused on understanding their needs. “Why are you interested?” she’ll ask. “What do you think it might do for you? What’s your situation? Do you have a special need or special purpose in mind?” Conrard is comfortable working online and virtually, which facilitates her work across state lines. The work exposes her to different cultures and lifestyles, from horse owners to gardeners to clients who have easements on their properties. “Different states have different cultures, and I like learning about them,” she says. “It’s more entertaining for me.” She recalls an elderly, retired rocket scientist and his wife who were leveraging a reverse mortgage for purchase to move from Oregon to a manufactured home in California. The loan was small, around $95,000, but the complications were large. The brothers who co-owned the manufactured home weren’t on speaking terms, making the transaction one of the more challenging loans she CRMP: Across the Kitchen Table continued on page 16 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022 15
has done. Ultimately, the transaction was a success, and the couple moved to California to be near family. “You’re doing this work whether it’s a $2 million home or a $100,000 home,” Conrard says. “It’s the same. They’re people, and they need your assistance, and that’s what I’m committed to. People may think of this as a financial transaction, but these can be emotionally charged transactions because they are lifechanging. As a reverse mortgage professional, it’s important to listen and be sensitive to their needs.” As a member of the tail end of the Baby Boomer generation, Conrard remembers when planning for retirement meant accumulating savings that would provide income in later years. She remains a staunch advocate of working with financial planners, while she has seen acceptance and understanding of reverse mortgages grow. “Using home equity can help stabilize your finances and actually make your retirement funds last longer and make you more secure,” she says. “That’s why I’m so passionate about these mortgages and how they can assist people.” Conrard recently saw a transaction play out exactly as intended when it was originated ten years prior. A friend’s husband was dealing with dementia, and the friend was facing the loss of his pension at his death. The husband passed away recently, and the friend remains financially secure in a home the couple shared and that remains appropriate for aging in place. Earning and retaining a CRMP, with its continuing education requirements, “keeps you on your toes,” she says. “The credential equips reverse mortgage professionals with the tools to answer all questions and explore all options, which means that there are more avenues that people can pursue to suit their own circumstances. When consumers work with a CRMP, they can be assured that it’s someone who is committed to the profession and who acts with integrity and follows through.” As consumers become more comfortable with reverse mortgages, Conrard envisions younger people incorporating home equity into their financial plans. To meet growing demand, she believes that financial institutions will create more products to meet demand, offering an expanded array of proprietary products for people at different ages and in different circumstances. Outside of work, Conrard enjoys her “sleepy little beach town life,” practicing yoga and Pilates, walking along trails to the beach, gardening and taking care of her 14-year-old cat. The difference her career has made materializes in the people who have made financial security a platform for achieving their dreams. “I’ve helped a lot of people get more comfortable in their retirement and have more fun and reach their goals,” she says. “That’s basically what I do. I really like helping people. I’m a little bit of a rescuer, but that’s just my MO. This way, I get to do it professionally.” CRMP: Across the Kitchen Table CRMP: Across the Kitchen Table continued from page 15 16 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
ALTHOUGH LOW INTEREST rates fueled strong mortgage closings in 2021, higher rates this year are expected to dampen some activity, leaving lenders in search of new sources of growth. And private-label reverse mortgages could be among the options, according to lenders in the field. They see products with features that can attract homeowners with higher-value properties, borrowers who are below the age threshold for a Home Equity Conversion Mortgage (HECM) and people in scenarios where the government-backed reverse mortgage is not a good fit. “The HECM is a great product, and it serves many customers really well,” says Jonathan Scarpati, vice president of wholesale lending for Finance of America Reverse (FAR), which has been offering proprietary products since 2014. “But lending is not one-size-fits-all. Every borrower is in a different situation.” It’s that recognition—as well as a desire for growth— that is spurring innovation in private-label reverse mortgages. “FAR sees private-label reverse mortgages as the future of the industry,” Scarpati says. Co-Existence Private-label reverse mortgages have long co-existed alongside the HECM. They take up a smaller share of the overall market for reverse mortgages. But free from the regulatory constraints of the government-backed product, they have been fertile ground for innovation. Private-label products include HomeSafe from FAR and AAG; Equity Elite from Reverse Mortgage Funding; EquityIQ from Liberty Reverse Mortgage; Platinum from Longbridge Financial; EquityPower from Nationwide Equities; Premier from 1st Nations Reverse Mortgage; and Reverse Jumbo from Plaza Home Mortgage. The most obvious difference is in the amount of home equity that borrowers can withdraw. HECM borrowers were capped at $822,375 in 2021, while private-label borrowers can take out millions. (Note: FHA increased the HECM lending limit to $970,800 on January 1.) Private-label reverse mortgages also are easier for condo owners to access, lenders say. InMassachusetts, for example, roughly eight percent of condo projects are approved by the Federal Housing Administration (FHA), which is required for a HECM, says George Downey, CRMP, founder of Harbor Mortgage Solutions in Braintree, MA. As a result, private-label reverse mortgages may open the door for the 92 percent not approved by FHA. “The new single-unit approval rules for HECMs make it a bit easier to qualify a limited number of units in an Private-Label Products Examined Industry Experts Explain Support for HECM Alternatives By Joel Berg Jonathan Scarpati George Downey 18 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
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