Reverse Mortgage Magazine Nov/Dec 2022

from our website at any time and watch them. We teach several topics. Completing the classes is not required— highly encouraged—but not required. We also offer shorter videos on the basics, such as loan comparison, amortization schedule, billing, loan calculations, max claim, principal limits and so forth. RM: You started the reverse mortgage division at Plaza from the ground up. What was that process like? Was it tough to get senior management on board? MR: Going back to 2008, it was a very difficult environment for all of us in the lending business. Mortgages, in general, didn’t have the best reputation with consumers. There were a lot of foreclosures. Lenders were closing or exiting the residential mortgage business. While all of this was going on, I decided to get into reverse full time. Plaza didn’t offer them, but I knew the owners. They were completely on board, completely supportive. It was a very difficult environment to step into at that time, but we were able to get it off the ground. A lot of it was triage and working through issues. For instance, we needed two different loan origination software systems, one for forward and one for reverse. Where could they work together? Where could they not? Warehouse lines were extremely difficult to come by. Reverse mortgages were looked upon as a niche product. Traditional warehouse banks would not lend on it. That’s not the case today; almost all do without blinking an eye. Our overall success can be attributed to the leadership, who stood by me and the product. Coming from a forward bank, operations, compliance, all those things, reverse mortgages are not necessarily a friendly loan program to implement into a traditional mortgage lender. You need to have the support of the whole organization to pull it off. RM: How long did it take before you were closing loans? MR: We completed our test cases in about three-and-ahalf months so we were able to get the reverse mortgage division up and running quickly. At that time, there were not a lot of wholesale investors. We worked with Generation Mortgage Co. and JB Nutter. Both were extremely helpful in getting us off the ground and teaching us how to navigate the business, underwrite loans, use the right software and get loans insured. Today, there’s a wealth of resources to teach these things, but not so much back then. RM: Were there many regulatory hurdles when you launched the reverse mortgage division? MR: Surprisingly no. It was 2008, and Dodd–Frank hadn’t come into play yet. One of the big changes with Dodd– Frank, and there were a lot, involved broker compensation and how mortgage banks would be paying mortgage brokers moving forward. That created a lot of angst in the coming years as to how we pay and stay compliant. We had some great support from individuals, like Jim Milano (NRMLA’s outside general counsel), coming in and helping us out on things like that, and the resources that NRMLA provided to ensure we operated within the scope of the HECM program were very helpful. RM: Plaza offers a proprietary reverse mortgage. What portion of your production is proprietary versus HECM? What distinguishes your proprietary product from others in the marketplace? MR: As everyone knows, the past couple of months has seen instability in the reverse mortgage marketplace. Before interest rates increased, roughly ten percent of our production was proprietary. Our proprietary program has been reduced quite a bit by our investor banks, meaning the principal limit factors were cut, and the coupon rate has gone up, so it has become a more challenging program to market and deliver to the consumer. Our product is like most others in the marketplace in terms of being able to pay off debt to qualify and using loan proceeds as asset dissipation is very beneficial compared to HECM. RM: Do you see your proprietary product recovering in the short term? MR: I do once the markets stabilize a bit. Nobody knows what that crystal ball looks like. The optimists are hoping that we get through the fourth quarter and the economics start to stabilize in the first quarter of 2023. RM: At the time of this interview on August 22, interest rates have increased dramatically. What’s it like in the marketplace? How have you adapted to these changes? MR: With the rise in the ten-year swap rate, we’ve seen compression in principal limits that finally caught up From the Top continued on page 14 From the Top REVERSE MORTGAGE / NOVEMBER–DECEMBER 2022 13

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