www.nrmlaonline.org P. 24 P. 28 INSIDE: Adjusting to Higher Interest Rates PAVEing the Way The official magazine of the National Reverse Mortgage Lenders Association July-August 2022 Volume 15, No. 4 Equity Release Expands in Europe Cross-Border Funding Remains a Focus
From the Top Sarah Cavanaugh, Senior Vice President, Operations-Retail, Finance of America Reverse By Darryl Hicks 12 Those We Help Reverse mortgage takes care of Colorado native By Darryl Hicks 33 Features 20 Equity Release Expands in Europe Cross-border funding remains a focus By Thomas A. Barstow 24 Adjusting to Higher Interest Rates What rising rates mean for reverse mortgages By Joel Berg 28 PAVEing the Way Appraisal companies stay proactive with Property Appraisal and Valuation Equity By Thomas A. Barstow 32 Special Feature Update on HECM Handbook Underway By Thomas A. Barstow Columns 3 In Reverse Halfway through 2022 and still much to do By Thomas A. Barstow 5 Steve Irwin: Moving Forward Globally, equity release products find acceptance 6 Board Room Fond memories of reverse mortgages prompt calls for innovations By Elly Johnson Departments 2 Scribes Meet this month’s contributors 8 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 CFPB outlines extent of medical debt held by seniors July-August 2022 Volume 15, No. 4 Contents PUBLISHER Peter Bell pbell@dworbell.com SENIOR EDITOR Thomas A. Barstow thomas.barstow@theYGSgroup.com ASSOCIATE EDITOR Darryl Hicks dhicks@dworbell.com MANAGING EDITORS Sam Hoffmeister samuel.hoffmeister@theYGSgroup.com Julia Berley julia.berley@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 Emily Graf 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 Megan Brodbeck (megan.brodbeck@ 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 CRMP: Across the Kitchen Table A chat with Nancy Everitt, CRMP and compliance professional By M. Diane McCormick 16
Scribes Meet This Month’s Contributors Steve Irwin (Moving Forward, p. 5), 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. Elly Johnson (Board Room, p. 6) has spent over 40 years in mortgage banking with the past 29 years in an executive capacity with several of the industry’s largest reverse mortgage originators and servicers. She now uses her years of experience and knowledge of the reverse mortgage industry to assist others in all aspects of the business as the owner and president of All Reverse Pro. She is an active NRMLA member, industry speaker, cochair of the NRMLA HUD Issues Committee and now serves on the NRMLA Board of Directors. In 2017, Elly received a “Career Achievement Award” from NRMLA for her thoughtful and tireless leadership in the reverse mortgage industry. M. Diane McCormick (CRMP: Across the Kitchen Table, p. 16) 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. Thomas A. Barstow (In Reverse, p. 3, Equity Release Expands in Europe, p. 20, PAVEing the Way, p. 28, and Special Feature [Update on HECM Handbook Underway], p. 32) is the senior editor for Reverse Mortgage. Barstow has had a 37-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 pres- ident of the Pennsylvania Society of News Editors and a former president of the Associated Press Media Editors in Pennsylvania. Joel Berg (Adjusting to Higher Interest Rates, p. 24) has been a business-to-business 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. 12, and Those We Help, p. 33) 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. 2 REVERSE MORTGAGE / JULY-AUGUST 2022
In Reverse Halfway Through 2022 and Still Much to Do By Thomas A. Barstow THIS YEAR IS half over, but the issues swirling around the reverse mortgage industry keep churning along. From higher inflation and rising interest rates to new government regulations, much still needs to be done to keep track of the changes and adjust as new challenges arise. And that is precisely what the team at NRMLA has been doing on your behalf, including a thorough review of the planned update of the HECM Handbook by the federal Department of Housing and Urban Development (HUD). All of that and more are highlighted in this edition of Reverse Mortgage. The cover story offers a look at equity release opportunities in Europe, where NRMLA’s counterparts are fighting similar headwinds, as well as more directly feeling the war between Russia and Ukraine. The leader of the European Pensions and Property Asset Release Group (EPPARG) says that interest in equity release products increased during the pandemic, with citizens there facing lockdowns and uncertainty similar to what we faced in the U.S. That situation offers a keen example of what we all know to be a truth that is a core principle of our industry: The home provides the best security for people in tough times, particularly those who are older and more vulnerable. At EPPARG and elsewhere, the intent is to continue to share lessons with their U.S. counterparts, so equity release products increasingly are accepted worldwide and investments flow more freely across borders. “Many countries around the world are facing the same challenge of how to make provisions for their elderly populations at a time when national budgets are coming under increasing pressure, which has become all the more pronounced in the light of the COVID-19 pandemic, and now market turbulence in view of the Russia/ Ukraine conflict,” Steve Kyle, EPPARG’s secretary- general, says in the article, Equity Release Expands in Europe (p. 20). “We have a great deal to learn from each other at the international level in terms of how to foster and grow safe markets for reverse mortgages and other equity release solutions.” As far as the headwinds here, the article Adjusting to Higher Interest Rates (p. 24) looks at how rising rates have been impacting the reverse mortgage market. Higher rates mean lower proceeds for HECM borrowers and slowing HECM-to-HECM refinancings, several observers point out in the article. This environment also means that private-label reverse mortgages might have more appeal, as well as the HECM for Purchase. Writer Joel Berg lays out the various scenarios in his discussions with experts. Meanwhile, the appraisal industry is being proactive with a federal report released in March that will work toward eliminating bias in the appraisal industry and create a fairer playing field for all citizens, especially those who live in minority neighborhoods. The Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) was created after an executive order issued last year by President Joe Biden. The task force’s roadmap includes recommendations along numerous avenues to ensure that appraisals are as objective as possible. In Reverse continued on page 4 REVERSE MORTGAGE / JULY-AUGUST 2022 3
Stakeholders in the appraisal industry have embraced the report, proactively implementing some of the suggestions before federal agencies release final guidance. Cristy Conolly, executive vice president of valuation modernization at Class Valuation, says that Class is among the appraisal management companies (AMCs) that have been involved and have been updating policies and procedures to meet the spirit of the report. Those efforts include improving training and recruitment to eliminate any hint of bias and to bring more minorities and women into the profession. Improvements in those areas, as well as the others outlined by PAVE, will build public confidence in the appraisal industry long term, she and others suggest. Another effort that demonstrates the commitment of NRMLA members to the greater good is the work done by Elly Johnson, who assembled a team to review HUD’s update to the HECM Handbook. As the leader of NRMLA’s HUD Issues Committee, she spearheaded an effort last fall that culminated in 183 comments to address HUD’s proposed updates and changes to the handbook. It literally had been decades since the last major update, Johnson points out in the article, Update on HECM Handbook Underway, (p. 32). Her team’s intense work led to an eight-page letter sent to HUD by NRMLA President Steve Irwin to highlight some of the more urgent concerns. The work by Johnson and other industry members of NRMLA is a prime example of how people often volunteer their time and expertise to the advancement of the industry. Johnson, who is owner and founder of the consulting firm All Reverse Pro, is a NRMLA board member. She also contributes to this issue with the Board Room column, Fond Memories of Reverse Mortgages Prompt Calls for Innovations (p. 6). As we enter the second half of this year, these and other matters will play out and many will remain unresolved going into 2023. As the saying goes, the year isn’t half empty. It is half full—with tasks and projects but also promise and possibilities. In Reverse In Reverse continued from page 3 GIVE US A TRY. SEND US A LOAN! For industry professionals only. nwecorp.com/nrmla NMLS #1408 Become a wholesale partner and you’ll see. NO B.S.UNDERWRITING UNBEATABLE SERVICE NO COMMISSION CAPS USE YOUR OWN AMC LOAN LIMITS UP TO $6 MILLION LIBERAL EXCEPTIONS COMPETITIVE PRICING SUPPORT TEAM ACCESS NRMLA PRINT MAILER JUNE 2022.indd 1 5/13/2022 3:06:29 PM 4 REVERSE MORTGAGE / JULY-AUGUST 2022
Moving Forward Globally, Equity Release Products Find Acceptance But More Must Be Done to Promote the Positives By Steve Irwin, President, NRMLA “We decide on issues large and small, whether we will be bystanders or upstanders.” —Samantha Power, administrator, U.S. Agency for International Development GLOBAL RETIREMENT PREPAREDNESS is in a fairly alarming condition, which necessarily needs the swift attention of advisers, planners, policymakers and regulators. In fact, according to Fidelity’s 2019 Global Retirement Survey of working people, retirement readiness in the U.S. stands with 37 percent of the working population “on target” to cover estimated expenses in retirement. In the U.K., 29 percent are on target. In Germany, this benchmark is at 24 percent. In Japan, we see 30 percent are on target. Clearly, financial security for retirees is a global risk. This risk can be partially mitigated through the effective and responsible use of accumulated home equity to further enable retirement consumption. Here is a link to the Global Retirement Survey: bit.ly/3KVhFmY. In the U.S. alone, older homeowners have some $10.6 trillion in available home equity, according to the latest quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index. Homeowners in the U.S. can convert accumulated wealth into accessible cash flow through the sale of the home, or they can borrow against the home with a HELOC, a second mortgage or a reverse mortgage. The U.S. doesn’t stand alone with product suites that enable borrowers to convert equity via reverse mortgage-type products. Similar programs exist in Australia, Canada, Germany, Italy, Ireland, New Zealand, Portugal, Spain, Sweden and the U.K. While the equity extraction products in these various countries differ in delivery, secondary market executions and product fundamentals, they all serve to provide a safe way for older homeowners to effectively age in place. We all should understand that ours is an industry whose concept has been proven on a global level. Now is not the time, however, to accept the status quo in the equity extraction marketplace. Given the universal strains on financial security during retirement, it is imperative that retirees are offered equity extraction products that meet their current needs— but the marketplace also must quickly adapt to ever- changing circumstances and conditions. Product offerings must evolve in anticipation of changing needs. In addition to the continual development of product offerings worldwide, it is incumbent on all global participants to educate homeowners, trusted advisers, planners and policymakers on the true risks and rewards of equity extraction products. These global solutions are only effective if they are trusted—and the intended outcomes are positive. Steve Irwin REVERSE MORTGAGE / JULY-AUGUST 2022 5
Board Room Fond Memories of Reverse Mortgages Prompt Calls for Innovations By Elly Johnson I RECENTLY TOOK a trip down memory lane, reminiscing about my time in the reverse mortgage industry. So many thoughts came to my mind, especially those fond memories of becoming part of a program designed to help our older Americans, a group that has always held a soft spot in my heart. After spending more than 13 years in the forward world, I embarked on a journey that would prove to be more fulfilling than I could have imagined. Helping someone realize a dream of homeownership is rewarding but not nearly as much as being a part of the HECM program that allows so many to remain in their homes. And notice that I said, “their homes,” not “their houses.” You know there is a difference. And if you spend time helping someone obtain a reverse mortgage, you will see that difference. I listened to the stories of how they raised their children in their homes—now some raising grandchildren there—and how they worked hard to make their house a home. Oh, if these walls could talk, what might they say? While traveling down memory lane, thoughts of the product design came to mind. In the early years of the pilot program, few people had heard of the product. Or, if they did hear about it, their first response was, “You mean that loan where the lender takes your home?” I wish I had a dime for every time I heard that. Since the beginning, we have come a long way, but we have far to go. We have seen the HECM product change over the years, specifically with the addition of new safeguards and consumer protections, such as the financial assessment and non-borrowing spouse protections. In addition, we have watched as new proprietary reverse products have entered our space, opening new opportunities for our aging population to remain in their homes. Yet the market penetration for reverse mortgages remains low. Many people say this product seems too good to be true, so why are there not more of them being originated? We have watched as others have developed an interest in this product and have seen many new faces join our exciting industry. Fresh faces and ideas are genuinely welcome, and we encourage anyone to step out of their comfort zone and play a more prominent role in helping to grow our business. Too often, people may sit back and think their ideas are not important, but those ideas will help bring us to a new level in reverse mortgages. A paradigm shift may be needed to help us catapult our industry to the next level and beyond. I challenge each of you to step back and look at your current processes, approaches, thoughts and beliefs regarding reverse mortgages. Then, develop working groups and task forces within your organizations to meet and discuss the product and the reason for the product—our older Americans. Provide an opportunity for open dialogue at every level. William Golding once said, “The greatest ideas are the simplest.” How often have you discovered a simple little invention and said, “Wow, I wish I had thought of that.” Be the one who thought of that next innovation with reverse mortgages. Elly Johnson 6 REVERSE MORTGAGE / JULY-AUGUST 2022
Th k TM FOR PRODUCER/AGENT USE ONLY. NOT TO BE REPRODUCED OR SHOWNTOTHE PUBLIC. Thismaterial is not provided by, nor was it approved by the Department of Housing&Urban Development (HUD) or by the Federal Housing Administration (FHA) ©2022 PHHMortgage Corporation, d/b/a Liberty ReverseMortgage, 1MortgageWay, Mt. Laurel, NJ 08054; NMLS ID # 2726 (www.nmlsconsumeraccess.org); 800-446-0964; Arizona Residential Mortgage Licensee 0903164; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act #4130046; ColoradoMortgage Company Registration - PHHMortgage Corporation as Responsible Party; Georgia Residential Mortgage Licensee #6266; Ohio Certificate of RegistrationMB804016.000; MassachusettsMortgage Lender License #ML2726; Licensed by the N.J. Department of Banking and Insurance; LicensedMortgage Banker - NYS Department of Financial Services; Rhode Island Licensed Lender. Equal Housing Lender. | LRM-R-071720-A | Rev 03/28/2020 The Equ IQ home loan is designed to help owners of higher-value homes convert a portion of their home’s equity into the funds they need in retirement. Equ IQis now enhanced with a more flexible underwriting process and a lower age limit, so more borrowers are eligible for the program! What's New? Bo ow g g b ow s ow s 55 s o g p s s d s ow p d voc b d voc b us ow p d Ra se n ac : 866 871 1353 LenderSupport@LibertyReverse.com Discover What's New With Equ IQ
White House Budget Forecasts Strong HECM Performance On March 28, the Biden administration released a fiscal year 2023 proposed budget that predicted strong economic numbers for the HECM program during the next federal fiscal year that begins October 1. The budget forecasted the HECM books of business for fiscal years 2023 and 2024 to operate at credit subsidy levels equal to negative 2.54 percent and negative 4.19 percent, respectively. A negative credit subsidy means the HECM program will generate substantially more receipts than it pays out in claims. Budget estimates also show that HECMs made during the current federal fiscal year will perform at a negative credit subsidy rate of 2.39 percent. The budgetary numbers are a further indication that Federal Housing Administration (FHA) reforms over the past few years are having the desired impact. Since the HECM program is self-sustaining and doesn’t require an annual appropriation from Congress, the president’s budgets provide a valuable bellwether on future HECM performance. In addition to the HECM performance indicators, the president’s proposed FY23 budget continues the suspension of the cap on the number of HECMs that the FHA can insure. Senior Home Equity Exceeds Record $10.6 Trillion Homeowners 62 and older saw their housing wealth grow by 3.98 percent, or $405 billion, in the fourth quarter to a record $10.6 trillion from Q3 2021, according to the most recent quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI). The RMMI rose in Q4 2021 to 370.56, another all-time high since the index was first published in 2000. The increase in older homeowners’ wealth was mainly driven by an estimated 3.7 percent, or $452 billion, increase in home values, offset by a 2.3 percent, or $47 billion, increase in senior-held mortgage debt. “To help mitigate the risks and concerns surrounding the ability of homeowners to age their way, it is critical that housing wealth is carefully and responsibly considered when developing a comprehensive retirement plan,” NRMLA President Steve Irwin says. “For many, housing wealth is indeed their greatest asset, and tapping that equity, under the right circumstances, will enable a secure path to aging security.” Using Home Equity Improves Retiree Health While the strategic use of home equity can provide financial relief for retirees, a new study co-authored by Ohio State University (OSU) researcher Stephanie Moulton finds that it is also good for their health. Every $10,000 that Medicare beneficiaries extracted from their homes greatly improved their success in controlling a chronic or serious disease, according to a summary of the OSU research published by the Squared Away blog that’s affiliated with the Center for Retirement Research at Boston College. Among the retirees who had hypertension or heart disease, for example, one standard used to determine whether the condition was under control was whether blood pressure levels stayed below 140/90, which the medical profession deems an acceptable level. The people who tapped their home equity were more likely to stay below these levels than those who didn’t. Read the blog post at bit.ly/3li0z8t and check out the study at bit.ly/3KxSHKa. Robinson Joins NRMLA Board NRMLA’s Board of Directors unanimously voted to have Ed Robinson, president and chief operating officer at American Advisors Group (AAG), join the board for the duration of calendar year 2022 to fill the vacancy created by the retirement of Jules Vogel. People are talking about ... What’s News EVERYTHING NEW YOU NEED TO KNOW 8 REVERSE MORTGAGE / JULY-AUGUST 2022
Robinson joined AAG in 2021 with more than 30 years of combined professional and military leadership experience, most recently serving as COO of Genesis Financial Solutions. Previous roles include senior vice president of real estate and mortgages at the United Services Automobile Association; head of mortgages at Fifth Third Bank; senior vice president, servicing operations, at PHH Corp.; and vice president of operations at Genworth US Mortgage Insurance (formerly GE Financial Assurance). The press is talking about ... Washington Post: Inflation Squeezing Older Americans Rising prices are squeezing household budgets around the country and putting additional strain on its 56 million residents age 65 and older, many of whom rely on fixed incomes and limited savings to cover monthly costs for prolonged and unpredictable periods, according to an article published by The Washington Post. In interviews that The Post conducted with more than a dozen retirees between the ages of 58 and 85, almost all said higher prices were forcing them to skimp on basics. They reported cutting back on meat and vegetables, driving less and trading in gym memberships for Jane Fonda workout videos. Half of older people who live alone are struggling to get by on less than $27,000 a year—or the bare minimum for a single renter in good health to cover expenses, according to the Elder Index, a cost-of-living measure created by the Gerontology Institute at the University of Massachusetts Boston. Read the full article at wapo.st/3rZHwUd. Morningstar Contributor Shares Strategies Certified public accountant and Morningstar contributor Sheryl Rowling shares strategies for using home equity in retirement. One of them involves a reverse mortgage. “Ignoring home equity might be fine for those with adequate retirement portfolios; it’s not fine for the rest,” says Rowling. “Tapping into home equity is sometimes seen as financial suicide, much like holding balances in high interest-rate credit cards. This is not necessarily true.” In addition to restructuring debt and downsizing, another retirement strategy that relies on home equity is a reverse mortgage. To help illustrate her point, Rowling used a fictional couple named Phil and Irma, who are both 80 and own a home worth $800,000, with a mortgage balance of $300,000. “A home equity conversion mortgage could pay off the mortgage in full, relieve Phil and Irma from making the monthly payments, and provide up-front cash of $40,000 to $80,000. If Phil and Irma prefer a lifetime monthly cash payment rather than lump sum, they could receive $600 to $800 a month instead of the $40,000 to $80,000 up front,” says Rowling. Read the full article at bit.ly/3OQsUjY. New York Times Gives Insights into Reverse Mortgages The New York Times published a positive article that highlights how reverse mortgages should no longer be characterized as a loan of last resort for house-rich, cashpoor retirees, but rather a strategic option for households to plan for a more financially secure retirement. Reporter Susan Garland says homeowners in their 60s and early 70s could use cash from a reverse mortgage to protect investment portfolios during market downturns, to delay claiming Social Security benefits or to pay large medical bills. “The best use of this tool is to provide and supplement income during retirement,” says Craig Lemoine, director of the financial planning program at the University of Illinois, Urbana-Champaign. “A younger retiree can stay in the house while turning equity into an income stream.” To help illustrate her point, Garland interviewed 75-year-old Marjorie Fox, whose husband passed away in 2016. She waited two years to retire as a financial planner and three to sell their house and buy a lakeside townhome in Reston, VA. For added protection, she took out a reverse mortgage on her new home. Read the full article at bit.ly/3LxzidA. What’s News continued on page 10 REVERSE MORTGAGE / JULY-AUGUST 2022 9
In Washington, they’re talking about ... LIBOR Transition Guidelines Added to Federal Spending Package The Consolidated Appropriations Act signed into law by President Joe Biden on March 15 not only funds the federal government through September 30, but also includes a separate bill related to the ongoing transition away from the London Interbank Offered Rate (LIBOR). The Adjustable Interest Rate Act authorizes the Federal Reserve Board (FRB) to come up with a replacement index based on the Secured Overnight Financing Rate (SOFR) that will be used beginning on the first London banking day after June 30, 2023, unless the FRB determines that any LIBOR tenor will cease to be published or be representative on a different date. Although the law is not fully clear, NRMLA’s outside counsel, Weiner Brodsky Kider, believes that the law arguably should not impact HECMs, because the adjustable rate HECM loan documents have a fallback provision and the loan documents, along with the federal law governing such documents, gives HUD the authority to come up with a replacement index for adjustable-rate HECMs. Counsel’s analysis of the law noted that there may be issues for LIBOR-based, adjustable-rate proprietary reverse mortgages if the loan documents do not contain a fallback provision that meets the requirements under the Act. As such, counsel recommends that individual lenders check the loan documents to see if LIBOR is the index for those loans and whether the documents contain a fallback provision that either specifies a “benchmark replacement” or a “determining person,” as those terms are defined under the Act. FHA Connection Enhanced for Electronic Submission of Flood Insurance Data Upgrades have been made to the Federal Housing Administration (FHA) Connection that require mortgagees to indicate if property improvements are in a Special Flood Hazard Area (SFHA) and, if so, provide the applicable flood insurance data electronically. The enhancements, announced in FHA Info 202225 on March 9, implement new fields for the electronic submission of flood-related data currently contained in FHA case binders. This electronic data collection will enable FHA to perform more data analytics on FHAinsured properties in flood zones. HUD Replaces FIT and Benefits Check Up The Financial Interview Tool (FIT) used by HECM counselors to create a budget and the Benefits Check Up tool to identify local resources for reverse mortgage borrowers have been replaced by the Client Budget and Resource Identity Tool (CBRIT), the U.S. Department of Housing and Urban Development (HUD) announced. The “Resource Identity” portion of the CBRIT will help counselors direct HECM clients to various non-HECM resources for which they may be eligible and provides instructions on accessing those resources. This feature replaces the National Council on Aging Benefits Check-Up, and its use should be reflected in HECM client files, said HUD. For any questions, contact your agency’s HUD point of contact or email housing.counseling@hud.gov. And now you’re up to date. What’s News continued from page 9 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 less and submitted to Associate Editor Darryl Hicks at dhicks@dworbell.com. 10 REVERSE MORTGAGE / JULY-AUGUST 2022
Simplify and speed up the qualification process with proceeds & asset dissipation The first to be offered to customers as young as 55+ in select states † Expand the condominium market up to 3x HECM program *Not applicable in all states; MA imposes a maximum loan amount of $2MM. Visit www.reversefunding.com/equity-elite for details †Available to borrowers as young as 55 in select states only. Higher minimum age requirements may apply. Visit www.reversefunding.com/equity-elite for details. Equity Elite Reverse Mortgage (“Equity Elite”) is Reverse Mortgage Funding LLC’s proprietary loan program, and it is not affiliated with the Home Equity Conversion Mortgage (HECM) loan program, which is insured by FHA. Equity Elite is available to qualified borrowers who may also be eligible for FHA’s HECM program or are seeking loan proceeds that are higher than FHA’s HECM program limit. Equity Elite currently is available only for eligible properties in select states. Please contact your loan originator to see if it is currently available in your state. Visit www.reversefunding.com/equity-elite for details and additional disclosures. NOT FOR CONSUMER USE. ©2022 Reverse Mortgage Funding LLC, 1455 Broad Street, 2nd Floor, Bloomfield, NJ 07003, 1 888-494-0882. Company NMLS ID: #1019941. For licensing information, go to: www.nmlsconsumeraccess.org. Arizona Mortgage Banker License #0927682; Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act; Loans made or arranged pursuant to a California Financing Law license; Georgia Mortgage Lender Licensee #36793; Massachusetts Mortgage Lender License #ML1019941; Licensed by the New Jersey Department of Banking & Insurance; Licensed Mortgage Banker-NYS Department of Financial Services -in-state branch address 700 Corporate Blvd, Newburgh, NY 12550; Rhode Island Licensed Lender; Texas Mortgage Banker Registration in-state branch address 6044 Gateway East, Suite 236, El Paso, TX 79905. For California consumers: For information about our privacy practices, please visit https://www.reversefunding.com/privacy. Not all products and options are available in all states. Terms subject to change without notice. Certain conditions and fees apply. This is not a loan commitment. All loans subject to approval. L4521_exp0423_v052023 Not just a jumbo - Loan amounts offered from $50K-$4MM* The only proprietary program to offer lump sum, line of credit and term payment plan options ®
THIS PAST JANUARY, Sarah Cavanaugh celebrated 30 years in the reverse mortgage business. When NRMLA held its first conference in 1997 at the Ritz-Carlton in La Quinta, CA, Cavanaugh was one of 50 people who attended. This writer was there too, assigned to cover the festivities for National Mortgage News. While most people specialize in one area of the reverse mortgage business, Cavanaugh has had hands-on experience in every facet of the business, including state and regulatory compliance; risk mitigation; retail, wholesale and correspondent origination environments; operations; and sales management. She also owned her own mortgage brokerage business for two years before returning to a corporate environment. She was first elected to NRMLA’s Board of Directors in 2000 and served as co-chair from 2003 to 2006 and in 2012. She currently co-chairs NRMLA’s Ethics Committee and is an active member of the HUD Issues and Compliance Committees. Reverse Mortgage sat down with Cavanaugh to reflect on her long and distinguished career. Reverse Mortgage: How did you get into the reverse mortgage business? Sarah Cavanaugh: It was a function of being in the right place at the right time. When I was at the end of my college career, I went into marketing research and specialized in working with financial products and financial institutions. One of my clients asked my company to host a series of focus groups on reverse mortgages. This was 1991. We hadn’t heard about them, so, of course, we researched them before doing a series of focus groups in Santa Rosa, CA. It was really fascinating, because even then I got a feel for the impact that a reverse mortgage could have on people’s lives, and that really piqued my interest. Ironically, a few months later, a friend of mine told me her company had just gone public and they were actively hiring. That company was Providential Corp., which was a reverse mortgage lender. I interviewed, got the position and started in 1992 as a marketing representative. It’s amazing to think that it’s been 30 years now since that day, and here I am still in this industry. RM: Congratulations on your recent promotion to senior vice president, retail operations. What are your primary responsibilities? What improvements would you like to see implemented while you’re in this role? SC: Well, first of all, thank you—I was really honored to be considered for this position and excited to continue working at FAR (Finance of America Reverse). In my Sarah Cavanaugh, Senior Vice President, Operations-Retail, Finance of America Reverse By Darryl Hicks From the Top Sarah Cavanaugh 12 REVERSE MORTGAGE / JULY-AUGUST 2022
new position, I’m responsible for retail operations—from processing all the way through underwriting. I have teams reporting up to me, and I work closely with those teams and other stakeholders, both at FAR and in our parent company. FAR has done a really great job of building a strong corporate culture and centering its values around helping customers and enhancing the customer experience. My aim in my current role is to implement those values effectively and really focus on our customer experience throughout the reverse mortgage process to see how we can improve it. I also look at our employee experience and make sure that, in addition to providing the best service for our customers, we also want our employees to be happy and to have what they need to succeed. At FAR, we’re really focused on creating a culture that’s positive and uplifting for everyone. RM: You’re one of the few people I know who has been involved in every facet of the reverse mortgage business. What was your favorite job and why? SC: That’s tough. I’ve had an incredible journey with FAR and Finance of America Companies for over five years now, but when I look back over the years, I’m also reminded of my time at Seattle Mortgage Co. That period of my career really stands out to me. I was there from 2000 until 2007. When I first started, we were doing about 40 reverse mortgages per month. We were a small department in a company that had been around since the 1940s. When I left six-and-a-half years later, we were well over 1,000 loans per month, both wholesale and retail. We were one of the biggest wholesalers in the industry, so it was a huge amount of growth. It was such an exciting time. The product was just starting to grow. Building a team, hiring the right people, mentoring people and really helping them grow into being the best they could be—it really was almost magical. We all had a common passion for the product, and we had a lot of fun at the same time. That was such a special time for me. I built many friendships over those years that will last me for the rest of my life. RM: What do you consider to be your greatest career accomplishment to date? SC: Two things come to mind. The first is helping inspire women to enter the financial services industry and to not be afraid to take on leadership roles. In 2000, I was the first woman elected to NRMLA’s Board of Directors and the first to co-chair the board working alongside Jim Mahoney. I take a lot of pride in that. I’ve had a lot of women over the years come to me and say, “Thank you for being a leader in this area and showing younger women what’s possible.” That means a great deal to me. The other accomplishment has to do with mentoring. Over the years, I’ve worked with and mentored a lot of really amazing people. It’s so rewarding today to look at my LinkedIn network and see the names of all the amazing connections I’ve made in this industry. A lot of them I worked with over the years, and some of them I hired and trained way back in the early 2000s before they went on to become successful professionals. I find that deeply satisfying and am so grateful to watch their journeys play out all these years later. RM: You’ve been active in NRMLA since the association was founded. How have you benefited personally from this partnership? SC: Well, relationships are the first thing—having longterm connections with people from different parts of the industry. And having the opportunity to meet and go to conferences, sit on committees, host conference calls and work with peers, investors, NRMLA and NRMLA’s outside counsel and lobbyists. All of that, I think, has really helped me become a more well-rounded professional. Being an active part of NRMLA, I’ve established some amazing friendships. I have colleagues who feel like family after all these years. That’s been a real gift, and it’s also helped me stay sharp and keep me close and in touch with the latest of what’s going on in the industry. Lastly, as a member, I’ve always felt that I had a voice here. If I had a concern, there was always someone there to listen and to take me seriously. RM: You’ve always been a strong supporter of ethics. You helped draft NRMLA’s Code of Ethics and Professional Responsibility and you’re currently chairwoman of the Ethics Committee. If you could stop one type of inappropriate behavior that you’ve seen consistently over your career, what would that be? SC: I wish I could stop the deceptive and misleading advertising that still goes on in parts of the industry. Being From the Top continued on page 14 From the Top REVERSE MORTGAGE / JULY-AUGUST 2022 13
on the Ethics Committee, I’ve seen it. Being out in the industry, I’ve seen it. I feel that it just has done such a disservice to our industry. In my 30 years, we went from this little niche product no one heard about, and now financial planners are accepting it as an option for their clients and want to learn more. But when misleading information is put out in our communities, it chips away at people’s trust in the reverse mortgage product itself. It chips away at all that knowledge we’ve tried to convey to them over the years and creates a lot of questions, concerns and confusion. It’s wrong, and it makes us look bad. I think this is probably one of the most damaging practices that we’ve dealt with in this industry and in the association, and it distracts people from our mission to help educate seniors so that they can meet their retirement goals. RM: As you know, most of the bad ads we see on the Ethics Committee are distributed by nonmember companies. NRMLA will submit them to federal regulators if the Ethics Committee directs us to. Your last job focused on compliance. Would you like to see FAR and the other wholesale lenders take a more proactive role in policing bad ads? SC: While it is impossible for lenders to successfully monitor every advertisement and communication sent out by third-party originators (TPOs), I would like to see all wholesale lenders provide the guidance and tools necessary to ensure the TPO is educated about how to promote reverse mortgages in a responsible and compliant manner. Providing those resources is half the battle, especially when working with new entrants to the reverse mortgage industry. RM: What’s the one piece of advice you would give to someone who wants to get into the reverse mortgage business? SC: Don’t forget why you’re here. Remember why you entered this industry in the first place and keep that focus. One of my true passions in life is helping seniors, and that was true even before I got into reverse mortgages. I’ve kept pictures of me with my borrowers. Many of them are framed, and some of them date all the way back to 1996. I look at those pictures, and I remember the borrowers. I won’t name names, but I had this one borrower—let’s just call her Maggie Smith—and her cat’s name was Marmalade, who was the love and the joy of her life. And all these years later I still remember her and so many others. I look at those photos regularly, because it’s easy to get swept up in the metrics, the dollars, the units and making important, difficult decisions. Ultimately, this is about people, and I always try to keep that in the back of my mind. Every decision I make, every question that hits my desk that has a loan number attached to it—there’s a real person associated with that file who has their own unique story. From the Top continued from page 13 From the Top 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 14 REVERSE MORTGAGE / JULY-AUGUST 2022
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IN 2008, NANCY Everitt’s mentor, Robert Yeary, offered her a position at his new firm, Reverse Mortgage Solutions. From her previous work with him, she knew that if he was entering the field, “there’s got to be a good reason for it.” “He just had a way of inspiring people and giving them their due, saying thank you to the last person who left every single day,” she says. “He had a great depth of knowledge. I knew I could learn a lot from him.” Today, Everitt is a longtime CRMP actively involved in the reverse mortgage industry, even while her career has evolved to concentrate on compliance. Her passion for learning drives her to maintain her CRMP credential and to be there for colleagues on the loan side who need guidance on the tricky nature of staying within compliance guardrails. When she joined Reverse Mortgage Solutions, Everitt only knew of reverse mortgages peripherally. She began her career in commercial banking in the late 1970s, staying there for 11 years until switching to traditional mortgages. Certified by the Federal Housing Administration (FHA) as a direct endorsement underwriter, she started at Reverse Mortgage Solutions underwriting all the loans. She stayed for seven years until joining Finance of America Reverse (FAR). It was her first official role in compliance. Over the years, compliance had been kind of rolled up in all her other jobs, she says. While many elements of compliance apply to all real estate transactions, reverse mortgages carry a handful of unique compliance issues, Everitt notes. Is the property owner-occupied? Is the primary borrower 62 or older? Everitt has witnessed a transformation in the public image of reverse mortgages. They started as curiosities that sometimes attracted distrust from people. Today, they are respected products that offer personalized solutions. The entry of large companies into the market created a system that pools and securitizes loans purchased from smaller brokerage shops that might lack the capabilities to fund the loans they generate. That’s where Everitt comes in, because, in those situations, compliance is crucial to successfully completing the transfer of assets. Everitt’s job at FAR was assuring that loans offered for purchase were in compliance and that all licensing required of loan officers and brokers was in place. If an out-of-compliance detail is minor—perhaps a missing signature or a wrong date—Everitt will usually ask the borrower or broker to correct the mistake. She also might scrutinize elements of the borrower’s record that aren’t consequential to getting a reverse mortgage but that speak to their capability to meet their obligations, including credit scores and income projections. “If what’s coming in versus what’s going out results in a negative number, they do not qualify,” Everitt says. “We don’t have ratios like a typical mortgage, but we do look to see if there’s a positive residual.” A deep dive into alert systems, such as Optimal Blue, the FHA, the U.S. Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau, can confirm a broker’s required credentials, such as HUD approval. That process can send up red flags when it finds suspicious activity or insufficient wherewithal to buy back loans if needed. “In those cases, we CRMP’s Career Evolves to Compliance A Chat With Nancy Everitt, CRMP and Compliance Expert By M. Diane McCormick Nancy Everitt CRMP: Across the Kitchen Table 16 REVERSE MORTGAGE / JULY-AUGUST 2022
don’t want to do business with them because all it takes is one loan to wipe them out,” she says. Everitt got her CRMP in 2010. She was still an underwriter then, in the early years of her reverse mortgage career. She heard that the CRMP’s required ethics course would be held in her area, and the credential seemed like something that would further her knowledge. “I just love to learn, and so I thought this would be something that would challenge what I already know, give me some additional information and help me continue growing in this industry,” she says. This spring, Everitt moved from Southern California, her home for 47 years, to Rock Rapids, IA. There, the mother of two adult children is near her daughter and five of her nine grandchildren. She rented a circa-1927 home and is still recovering from trying to squeeze a 21st centurysize refrigerator through a 20th century-size door. She already knew many of the Rock Rapids townspeople from Christmas visits and services at the church where her son-in-law is associate pastor, but she is experiencing a new level of neighborliness compared with her California condo. “When the moving truck showed up, my daughter put together a crowd of 12 people to help unload,” she says. “I had never even met some of them before, and they just showed up because my daughter asked them to.” Once Everitt is settled in, she will resume working. She already has feelers out among her network of colleagues and friends—one of the advantages of NRMLA membership and the CRMP. Any time she has a question, she can easily call a friend and find a fresh perspective from someone she has met at a NRMLA conference or CRMP session. “I’m very fortunate in having those resources because I’ve been working remotely, just by my lonesome, for 30 years,” she says. “I have these virtual friendships and connections that I’m able to tap into.” Though she rarely deals directly with borrowers, she does have people she sees as clients—her loan officers. Any time they encounter “gray areas” of their own and feel they are in murky compliance territory, they know they can call her and get a straight answer. In the end, the loan officer and the borrower are both confident that they are doing the right thing. Everitt believes in sharing her knowledge with the industry and the community as an expression of gratitude for the opportunities she has been given. She serves on NRMLA’s Risk & Compliance Committee so she can support the field while also staying on top of trends, discussing shared challenges and amplifying her advocate’s voice. She is also passionate about empowering others to take control of their money. While on the board of Financial Women International, she taught financial literacy at a women’s shelter that the organization supported. Now, she is adapting those lessons to teach financial literacy to teens at the local library. She remembers the barriers to upward mobility that she encountered early in her career. “Helping people overcome some of those barriers is my way of giving back,” she says. CRMP: Across the Kitchen Table REVERSE MORTGAGE / JULY-AUGUST 2022 17
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