www.nrmlaonline.org The official magazine of the National Reverse Mortgage Lenders Association September-October 2023 Volume 16, No. 5 INSIDE: Being Vigilant How to Help the Servicing Process P.23 P.28 Servicers Innovate With New Technologies and Evolving Customer Expectations STAYING AHEAD SERVICING with
For business and professional use only. Not for consumer distribution. ©2023 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 Solve the Market Maze Partner with us at farwholesale.com/sellmore or scan the QR code Custom marketing materials, expert training, and the most robust reverse mortgage product suite in the industry to get you from lead gen to closing.
From the Top Michael Branson, CEO, All Reverse Mortgage, Inc. By Darryl Hicks 10 Those We Help Health issues lead Texas man to reverse mortgage By Darryl Hicks 32 September/October 2023 Volume 16, No. 5 Contents CRMP: Across the Kitchen Table A chat with Paul Scheper, CRMP, Loangevity Mortgage, Ladera Ranch, CA By M. Diane McCormick 13 Features 18 Staying Ahead With Servicing Servicers innovate with new technologies and evolving customer expectations By Joel Berg 23 Being Vigilant NRMLA’s legal advisers discuss new developments By M. Diane McCormick 28 How to Help the Servicing Process Expert offers tips for LOs to ensure smooth post-closing process By Thomas A. Barstow Columns 3 In Reverse Servicers, NRMLA and attorneys monitor trends for you By Thomas A. Barstow 5 Steve Irwin: Moving Forward Strive to meet borrowers’ expectations Departments 2 Scribes Meet this month’s contributors 6 Hey, Members A roundup of issues and news for NRMLA members 34 Member News Who’s who in reverse mortgages 36 Numbers Fidelity report shows concern with inflation and uncertainty PUBLISHER Peter Bell pbell@dworbell.com SENIOR EDITOR Thomas A. Barstow thomas.barstow@theYGSgroup.com ASSOCIATE EDITOR Darryl Hicks dhicks@dworbell.com MANAGING EDITOR Therese Umerlik therese.umerlik@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 Christel Emenheiser 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 Natalie Matter Bellis (natalie.matterbellis@ theYGSgroup.com) and Therese Umerlik (therese.umerlik@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 ©2023 National Reverse Mortgage Lenders Association
Scribes Meet This Month’s Contributors Thomas A. Barstow (In Reverse, p. 3, and How to Help the Servicing Process, p. 28) is the senior editor for Reverse Mortgage magazine. Barstow has had a 38-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 (Staying Ahead With Servicing, p. 18) 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 (Hey, Members, p. 6, 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. 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. M. Diane McCormick (CRMP: Across the Kitchen Table, p. 13, and Being Vigilant, p. 23) 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. Nationwide Full-service title & settlement services. Accurate closings that leave your senior borrowers happy! Experienced Seasoned experts matched to the unique needs of your transaction. Hassle Free Assistance & 1-on-1 training every step of the way. AllegiantReverse.com Toll Free: 844.808.8299 Reverse Done Right. 2 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
In Reverse Servicers, NRMLA and Attorneys Monitor Trends for You By Thomas A. Barstow IT ISN’T EASY running a business while staying on top of all the details. If all the i’s are dotted and the t’s are crossed as they should be, you can stay focused on growing your business. However, if details are missed or misunderstood, everything you have spent years building can come to a halt. Good employees are important, of course, but so are good partners, subcontractors and peer groups. In this issue of Reverse Mortgage magazine, we look at some of the ways to make the processes as smooth as possible by talking to industry experts in servicing and law and asking them about the latest news and trends. Leslie Flynne laid out expert tips during her presentation at the NRMLA Western Regional Meeting in California. If you missed her seminar or you are looking for a recap, we report on Flynne’s presentation in the article How to Help the Servicing Process (p. 28). Flynne, senior vice president of reverse mortgage servicing with Mutual of Omaha Mortgage, gives sound advice on how loan officers can assist with the servicing process from start to finish. The article includes a number of links to resources that should help you stay informed, including resources found on NRMLA’s website. We also talk to servicing companies’ top officers who monitor trends to ensure customers have the best experience possible when working through questions about their loans. While everyone is becoming more technologically savvy, the human touch remains an essential element in servicing loans. In Reverse continued on page 4 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023 3
Experts will continue to monitor developments with artificial intelligence (AI), which is expected to influence just about every industry as the technology matures. As reported in various business publications, some observers are concerned about potential downsides, a point Michael Kent, president of PHH Mortgage/Liberty Reverse Mortgage, makes in the cover story, Staying Ahead With Servicing (p. 18). “We have some ideas about how great it could be,” Kent, also co-chair of NRMLA’s Board of Directors, tells writer Joel Berg about AI. “We also have some fears that we need to work through. But I think AI could offer some really incredible solutions down the road as it’s perfected and implemented.” Writer M. Diane McCormick talks to lawyers who serve as NRMLA’s outside counsel team in the article, Being Vigilant (p. 23). They discuss the latest trends with the Biden administration’s work with appraisal bias, the switch away from the London Interbank Offered Rate index, new regulatory developments and issues that have arisen in state legislatures you should follow. The challenging work at Weiner Brodsky Kider PC is just one of the ways NRMLA helps keep you on track while giving perspective on the government’s role with regulations. The attorneys are on the front lines, working with administration officials to ensure the concerns of reverse mortgage lenders are being considered as regulators field questions and contend with issues from the public and elected officials. The attorneys’ interactions with regulators help to prevent unintended consequences while building rapport with federal officials. “The government is being very thoughtful,” James A. Brodsky says in McCormick’s article. “This leadership team at HUD (U.S. Department of Housing and Urban Development) is particularly thoughtful and creative and nimble.” One fact that helps government officials be responsive is that reverse mortgages are a critical tool for retirement planning. Not everyone will need a reverse mortgage. But those who do find it to be a lifesaver. That is a point made in the Those We Help feature (p. 32). Gary Beck, a Texas resident, used a reverse mortgage to help him get through health issues when he was in his 60s. “I am feeling much better, and I am able to work, but the pressure to make loan payments on my home and my truck is gone,” he tells Darryl Hicks, NRMLA vice president of communications. Such stories are at the root of why successful loan officers and executives continue to tout the product. In the From the Top segment (p. 10), Hicks talks with Michael G. Branson, CEO of All Reverse Mortgage Inc. Branson became aware of the power of reverse mortgages when his mother asked him about the product, which Branson started offering in 2006. “The reverse mortgage provided a small line of credit to fix up the things she needed to do in her house and gave her some extra money every month,” says Branson, who had been working in the forward mortgage business at the time. Inspired by how the product helped his mother, he eventually started his own company. “I started originating reverse mortgages exclusively in 2006 and founded All Reverse Mortgage in 2007.” In Reverse In Reverse continued from page 3 4 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
Moving Forward Strive to Meet Borrowers’ Expectations We Can Do More to Ensure Great Service By Steve Irwin, President, National Reverse Mortgage Lenders Association “Longevity in this business is about being able to reinvent yourself or invent the future.” —Satya Nadella, Microsoft CEO AS THE LATE Oren Harari, one of the world’s “best minds in management,” often explained to me, companies are not built for their employees and management teams. They are built for those customers who are willing to pay for the provided goods and services. This maxim holds especially true for the reverse mortgage industry. Our member companies are built for the reverse mortgage borrower, their families and their trusted advisers. Our success as an industry is dependent on the satisfaction of those customers and trusted advisers, and those successful outcomes depend on a service delivery that meets, or exceeds, those customers’ expectations. I have said it before, and it’s certainly worth repeating: A sure-fire recipe for exacerbating customer dissatisfaction is not aligning the customers’ expectations with the actual service that can be delivered. It is incumbent on all industry participants to strive to eliminate any disconnect between the expectations of a reverse mortgage client when their loan is transferred to the loan servicing team and the policies and procedures required of that loan servicing team. We must do all that we can to ensure the borrowers’ expectations are met by the service that can be delivered. We have seen the glowing testimonials of satisfied reverse mortgage borrowers. These positive outcomes are the result of the alignment between those borrowers’ expectations and the service delivery received by those borrowers. It may sound simple, but it remains so difficult to execute. The best way to achieve this result is for each of us to fully understand the complete reverse mortgage life cycle. We must arm ourselves with the knowledge of the processes and timing of the transfer to your servicing partners, the regulations required for occupancy determination, the timing surrounding the distribution of draw requests and, ultimately, the end-of-loan requirements. These loan administration requirements, once fully understood, must then be communicated to the borrowers in language as clear and plain as possible. NRMLA is here to help with these efforts. I want to remind you that we have developed a set of consumer guides, which can be found on our member site, NRMLAonline.org, and on our consumer site, reversemortgage.org. If there are additional guides that might help our industry, please reach out to me, and let’s work together to further develop resources. We must continually strive to have the customer’s expectations properly aligned with the realities of the reverse mortgage life cycle. It’s a complicated product, and the nuances of loan administration need to be distilled to an easily understood set of expectations. Effectively establishing those customer expectations will strengthen our industry and further the cause of our products as customer- centric tools for effective aging in place. Steve Irwin REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023 5
Senior Home Equity Totals $11.62T in Q1 2023 The continued slowdown in the U.S. housing market is impacting home equity levels. According to the latest quarterly release of the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) published in late June, homeowners 62 and older saw their housing wealth fall by 1.7 percent, or $196 billion, in the first quarter of 2023 to $11.62 trillion. The NRMLA/RMMI fell for a second consecutive quarter to 406.52 in Q1 2023. The decline in the index can be attributed to several factors but primarily a decline in senior home values, which fell 1.3 percent, or $185 billion. “Regardless of these latest numbers, reverse mortgages remain an essential component for addressing a huge problem for many Americans: funding retirement,” says NRMLA President Steve Irwin. “More than 1.3 million families have used a reverse mortgage alongside their 401(k)s, IRAs, savings, investments, Social Security, Medicare and Medicaid to cover life’s daily expenses so they can live more financially secure lives. As with all major financial decisions, a reverse mortgage should be part of an overall strategic plan, with input from knowledgeable professionals and family members who may be impacted.” A Roundup of Issues and News for NRMLA Members By Darryl Hicks Darryl Hicks Hey, Members Hey, Members continued on page 8 6 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
Discover the Liberty difference today! BECAUSE EVERY LOAN COUNTS WE GO THE EXTRA MILE This material is not provided by, nor was it approved by the Department of Housing & Urban Development (HUD) or by the Federal Housing Administration (FHA). © PHH Mortgage Corporation, DBA Liberty Reverse Mortgage, 2000 Midlantic Drive, Suite 410-A, Mt. Laurel, NJ 08054; NMLS ID # 2726 (www.nmlsconsumeraccess.org). For a complete list of licenses, visit www.libertyreverse/licensesnmls. Equal Housing Lender.
CFPB: Reverse Mortgages Represent Two Percent of Complaints In 2012, the Consumer Financial Protection Bureau (CFPB) established an online platform for consumers to lodge complaints against financial services providers. The good news is that reverse mortgages have consistently ranked low on the complaint list. Out of 29,100 mortgage-related complaints submitted to the CFPB in 2022, approximately 400, or two percent, were brought against reverse mortgage companies, according to the CFPB’s Consumer Response Annual Report, which can be downloaded at https://bit.ly/46wZakC. In 2022, consumers submitted 300 reverse mortgage complaints. They expressed frustration in getting statements or a payoff amount from their lender, or they stated they were having difficulties making a payment or paying off a reverse mortgage. In their responses, companies apologized for the delay and provided the requested information. In other responses, companies requested follow-up information from consumers. The vast majority of the reverse mortgage complaints were closed with an explanation (i.e., most of the complaints were closed without monetary or nonmonetary relief). New Colorado Law Protects Borrowers Impacted by Natural Disasters NRMLA achieved an important legislative victory when Colorado Gov. Jared Polis signed legislation (House Bill 1266) into law on June 7 that provides new protections for reverse mortgage borrowers who must temporarily vacate their properties after a federally declared natural disaster. The bill was sponsored by state Rep. Kyle Brown after one of his constituents nearly lost his home to foreclosure after it was rendered uninhabitable following the Marshall Fire in 2021. Effective immediately, the new law prevents a HECM from being called due and payable because of a temporary absence from the home due to a natural disaster as long as: • The borrower is engaged in repairing the home with the intent of reoccupying the home as a principal residence or selling the home; • The borrower stays in communication with the lender while the home is being repaired; • The borrower complies with all other terms and conditions of the reverse mortgage; and • Repairing or rebuilding the home does not reduce the lender’s security. NRMLA worked closely with Polis, the Colorado Mortgage Bankers Association and several Coloradobased NRMLA members to draft a bill acceptable to the industry and the U.S. Department of Housing and Urban Development. U.S. Older Population Grew at Fastest Rate in 130 Years The 2020 U.S. Census continues to yield interesting statistics that help underscore the growth potential for the reverse mortgage marketplace. On May 25, the U.S. Census Bureau revealed that the U.S. population 65 and older grew nearly five times faster than the total population between 2010 and 2020, reaching 55.8 million, or 16.8 percent of the population. This represents the fastest rate of growth of any decade in the U.S. since 1880 to 1890. The older population increased by 50.9 million, from 4.9 million (4.7 percent of the total U.S. population) in 1920 to 55.8 million (16.8 percent) in 2020. This represents a growth rate of about 1,000 percent, almost five times that of the total population (about 200 percent). Other highlights are as follows: • In 2020, about one in six people in the U.S. were ages 65 and over. In 1920, this proportion was less than one in 20. • The 65 to 74 age group was the largest of the older age groups, with 33.1 million people, representing over half of the 65 and older population, or one in ten Americans. • While the share of the U.S. population ages 65 and older grew, the nation remained relatively young compared with many of its peer nations. Japan had the largest share (28.5 percent) of older residents, while the U.S. ranked 34th (16.8 percent). FHA Finalizes Policies to Expedite HECM Assignments An important policy change occurred on May 17 when the Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2023-10 to allow for faster Hey, Members Hey, Members continued from page 6 8 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
payment of funds to mortgagees when they assign a HECM to the U.S. Department of Housing and Urban Development. ML 2023-10: • Lowers the minimum loan balance required to submit an assignment claim for review from 97.5 percent of the maximum claim amount to 97 percent; • Allows for mortgagees to submit original notes and mortgages no later than 90 days after the assignment claim payment date; • Extends the time frame for delivery of assignments of the mortgage to the Secretary from six months to 12 months for HECMs with FHA case numbers assigned before September 19, 2017; and • Modifies the supporting documentation that mortgagees must submit to be eligible for preliminary title approval. “This is huge news,” NRMLA President Steve Irwin says. “We greatly appreciate the steps taken by FHA to make the assignment process for HECM reverse mortgages more efficient and to further reduce liquidity risk to mortgagees.” Commentary: Financial Assessment Is Still Working New View Advisors published a commentary in midMay highlighting that the financial assessment (FA) continues to dramatically reduce tax and insurance (T&I) defaults among HECM borrowers. “Now in its ninth year, FHA’s (Federal Housing Administration’s) policy of requiring the financial assessment of borrowers’ ability to pay has helped cut tax and insurance defaults by over 80 percent and serious default by over 75 percent,” according to the commentary. As of March 31, 2015, the pre-FA data set had a T&I default rate of 7.1 percent and an overall serious default rate of 10.5 percent. As of March 31, 2023, the post-FA data set shows a T&I default rate of approximately 0.9 percent, and an overall serious default rate of 2.3 percent, according to New View Advisors. Read the full commentary at https://bit.ly/3CRhqI6. Submit Your Questions or Comments I’d also like to use this column to respond to questions you may have about NRMLA, the CRMP designation or anything that’s on your mind. Send your questions or comments to dhicks@dworbell.com. www.fivebrms.com • 855.552.8020 GET AHEAD OF THE STORM. INTRODUCING CLADE™ PRE- AND POST- DISASTER ASSET MANAGEMENT. The CLADE Disaster Alert System enables servicers to take proactive measures to protect at-risk properties before a disaster strikes, and to streamline the inspection, debris removal, and claims processes, post-disaster. CLADE PROVIDES: Advanced Geo-Tagged Asset Locations Real-Time Disaster Occurrence Notification Layered Mapping for Disaster Zone Identification Exportable Property Lists for Asset-Specific Analysis One-Click Access to Field-Service Orders Learn more about how CLADE can help protect the value of your default and REO assets at Fivebrms.com today. REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023 9
MICHAEL G. BRANSON, CEO of All Reverse Mortgage Inc., Orange, CA, has worked in the mortgage business for 45 years, the last 18 devoted exclusively to reverse mortgages. In 2006, he was working for Pacific Community Mortgage, an Alternative-A (Alt-A) lender, when his mother approached him about getting a reverse mortgage. He didn’t know much about reverse mortgages, but he learned as much as he could in a short amount of time and helped his mother get one. The positive impact on his mother’s life inspired Branson to form All Reverse Mortgage (ARM), which consistently ranks among the Top 20 HECM lenders. Reverse Mortgage magazine sat down with Branson to learn more about ARM and what makes the company successful. Reverse Mortgage: Tell me about the reverse mortgage you made for your mom and how that experience led to the formation of ARM. Michael Branson: My mom came to me in 2005 asking about reverse mortgages and what I thought about them. I said, “You know, Mom, in all honesty, I have no idea. I’ve never done one, never been around them.” I worked for a forward mortgage company that originated Alt-A loans. I had been in the mortgage business for about 30 years, but I had never had any exposure to reverse mortgages. I told her I would look into it and get back to her. The more I learned about reverse mortgages, the more I liked what I saw. We were (Federal Housing Administration) FHA-approved and had to originate ten test cases before we could become approved to offer HECMs, so I enlisted the support and buy-in from the rest of our team, and together, we all decided to go for it. I told my mom that if she wasn’t in any huge hurry, we’d use her as one of our test cases. She was happy to do it. She was in no immediate need to get it. My mom was an active person. She went to Angels games, and she golfed, but she had to put a hold on a lot of this stuff because she ran out of money in the middle of every month, which happens to many seniors. She only had a pension. She wasn’t eligible for Social Security because she worked for the state. It turned out to be a good deal for her. The reverse mortgage provided a small line of credit to fix up the things she needed to do in her house and gave her some extra money every month. I started originating reverse mortgages exclusively in 2006 and founded All Reverse Mortgage in 2007. RM: Tell me about ARM. From what I’ve read, your whole family is involved in the company. MB: Yes. My son, Cliff, is my partner. My other son, Michael, is vice president of sales. Caren Dahmus is our financial controller and our resident FHA specialist. While she’s not technically family, she may as well be because she has worked with me for over 20 years. Our funding manager is my daughter, Jennie Hegner, and it was my wife, Denise Branson, who set up all the closings, post-closings and insuring at the company before she handed the reins over to Jennie when she retired last year. We have other employees who’ve been with us for 15, 20 years. Between sales and operations, we’ve had as many as 35 employees, but we’ve had to pare that down to about 22 right now because of the current environment we’re operating in. RM: How many states are you licensed in? MB: We’re currently licensed in 15 states, but ARM has been licensed in as many as 18 states. If a state doesn’t produce for us and it becomes more of a regulatory burden, then we’ll leave. We don’t do direct marketing. We Michael Branson, CEO, All Reverse Mortgage Inc. By Darryl Hicks Michael Branson From the Top 10 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
From the Top From the Top continued on page 12 don’t do mail, email or TV broadcasts. Everything is done on the internet, so people come to us. For some states, that approach works well but not in every case. RM: When I approached you about doing this interview, you mentioned that ARM was undergoing two state audits. I am curious about what that experience was like. Are you finding that state regulators are more well-informed about reverse mortgages? MB: We don’t have to do a lot of educating. Once in a while, we get an auditor who is looking at a list and doesn’t understand that there are certain things that don’t apply to reverse mortgages. By and large, they’re quick and easy, and we get through most audits unscathed. Occasionally, we get something that we don’t pick up on—for example, a document provider changes a disclosure we don’t catch. If our processor doesn’t pick up on it and we don’t catch it until the regulators catch it, then we must go back and redisclose to the borrowers. Auditors don’t typically get hot under the collar about that, but they do make us fix the errors and are sure that we have procedures in place so it doesn’t happen again. RM: Tell me about ARLO, the cartoon dog prominently displayed on your website. MB: We get a lot of questions from consumers. Many of them want to know, if they make a prepayment or access funds, how does that affect what they owe in the future? Most online calculators don’t provide that level of detail. We developed a calculator that allows consumers to play around with different scenarios. My son, Michael, developed the Excel-based calculator so that borrowers can enter different rates so that their results vary if interest rates change over time to see how it affects their balance. Our clients can change the amount they borrow or even the amount that they repay and see how that affects their loan long term. The calculator works well, and people love it. We decided, “OK, now we need to name the thing,” and we came up with the All Reverse Loan Optimizer or ARLO. Now that we had the ARLO name, we decided that it needed a persona, so it became a dog. Then the dog had to have glasses. Then ARLO got a cape. Pretty soon we had hats and stuffed animals that we sent out with each loan that we closed. People love the stuffed animals and so now ARLO is a prominent part of our marketing and branding. We even had it trademarked. RM: You also write extensively and have a blog on your website that addresses many topics. I don’t know many mortgage lenders that do this. How did that come about? MB: That was Cliff’s idea. He said Google likes content, and he added, “I’m not going to write it, and Michael’s not going to write it, so, Mike, you get to do that.” Even though I write it, it is still a group effort in that many times Cliff comes up with the topic, I write it, and then Michael and Caren often proofread for content and other errors, which I have been known to make now and again. We started a blog. We were approached early on by Forbes and by a couple of other publications for articles, which we gladly supplied. Now we have 15 to 16 years of content out there. RM: And this helps prospective clients find you? MB: Yes, it does. That’s one of the reasons why we don’t have to put out mass emails and things like that. There’s a lot of content out there. When people go on a search engine, like Google, and type “reverse mortgage,” our content is usually on the first page of results. RM: Over the past 18 years that you have specialized in reverse mortgages, what are some lessons you’ve learned that have helped make you more successful? MB: First off, we realized that this is not a product you sell to people. We’ve always believed that you’ve got to educate people. Let them know what a reverse mortgage is and how it works. We started this company with the philosophy that we’d rather you not take the loan for the right reason than take the loan for the wrong reason. We don’t want people coming back mad at us that they took a loan because we talked them into it. We tell people the good, the bad and the ugly, and let them make an informed decision. We don’t make the decision for them. We educate them. If people say, “What do you think about this for my circumstances?” we tell them we’re not financial advisers. We’ll tell you everything there is to know about a reverse mortgage, and then you can decide with your financial REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023 11
From the Top adviser, your trusted accountant or your attorney, whether that’s the right loan for you. But we can’t make that decision—only you can. The key to our success is we don’t push people, and they trust us for that. RM: Do you stay in touch with your clients after they close? MB: We sure do, but we also make sure never to violate any email laws or the Telephone Consumer Protection Act, Do Not Call Registry, no autodialing, etc. We don’t go after people whom we don’t know didn’t contact us first. If you haven’t authorized us to send you stuff, we don’t do it. If you ask us to quit sending you stuff, we’ll quit sending it. Information that we send out, we keep relevant and up to date. We do not go after refinances of the loans we’ve done because we don’t churn. If somebody contacts us and asks us if we’ll refinance their loan, of course, we will if that’s what they want. Maybe we missed the boat when home values rose and rates dropped, but we just make it a point not to cannibalize our pipelines. RM: How do you generate most of your loan production? Business referrals? Advertising? Social media? MB: Our business comes from referrals, social media and being listed high on Google searches. When we first started out, we tried everything. Live lead transfers. Emails. Then we tried sending out placards—postcards— same as everybody else, which ended up going into somebody’s trash somewhere, and people saying, “Don’t call me anymore.” We pretty much found out what made people angry quickly. We don’t want to be that company. We’ve always kept staffing relatively lean. We never wanted to be the company that was so bloated we were desperate for business and had to reach for every loan or make the most possible on each loan, and we saw that as a way to keep our pricing down. From the Top continued from page 11 LET US PROTECT YOUR ASSETS SERVICES Preservation Inspection Title and Diligence Property Maintenance & Tenant Services Appraisal & BPO REO Asset Management Vacant Property Registration & Utility Processing GuardianAssetMgt.com Guardian Asset Management is an industry leader providing our clients a comprehensive range of solutions to help manage and maintain their properties effectively yielding the highest return. 12 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
PAUL SCHEPER KNOWS how reverse mortgages can make a difference. There were the clients who used reverse mortgages to fill pandemic-era income gaps—and had so much fun they retired fully to enjoy the rest of their lives. And there was the mother whose daughter was undergoing cancer treatments. A monthly infusion of cash from the mother’s reverse mortgage freed the daughter to escape her financial worries and concentrate on recovery. Two years later, the daughter is cancer-free, and the mother has stopped taking withdrawals. “Indirectly,” Scheper says, “this product helped somebody overcome cancer.” Scheper is a positive thinker and a CRMP whose career in reverse mortgages found him after he spent 20 years devoted exclusively to forward mortgages. He grew up in California and ventured east to attend Harvard University, where he switched majors from business to psychology “because I wanted to have fun in school and wanted to learn something that was actually interesting.” In his senior year, Scheper married his high school sweetheart, Gigi. After he graduated in 1983, most available jobs were in finance, but he still longed for a human connection. He and Gigi moved back to their native California, where a college roommate mentioned that his employer, a large bank, was seeking management trainees. That’s where Scheper was introduced to traditional mortgages. But around 2004, he noticed that older applicants weren’t qualifying. “They needed income, assets, perfect credit,” Scheper says now. “I was referring them to a friend doing reverse mortgages, and he would fund all of them. The people seemed happy, joyful, excited. After about five referrals, I said, ‘I’m going to learn this myself!’” Scheper attended a NRMLA conference in Chicago and, armed with a yellow notepad and a pen, he “learned reverses cold.” He didn’t drop traditional mortgages but added the reverse product to his portfolio. “To me, it’s an advantage to be able to offer both because sometimes it’s more suitable and appropriate to listen and find out that this customer might fit better on a traditional loan or traditional equity line,” he says. “I don’t like to pigeonhole anybody into a reverse mortgage, unless it’s suitable, sensible, sustainable and logical.” Scheper built his client base through referrals and direct marketing. He acquired mailing lists of seniors with equity from title companies. He gave seminars in restaurants and offices. For many years, he sent every customer in his database a newsletter sharing sports scores, recipes and a reminder that he was available to provide the “alpha and the omega loans,” from a buyer’s first home loan to what can be their final home loan, a reverse mortgage. When he meets prospective clients, Scheper reminds them that a reverse mortgage is just a loan, and “it’s exciting when you see that it boils down to these five words: It is just a loan. KISS stands for keep it super simple. It’s unbelievable when you see what happens.” When Working With Clients, CRMP Emphasizes Listening Skills A Chat With Paul Scheper, CRMP, Loangevity Mortgage, Ladera Ranch, CA By M. Diane McCormick Paul Scheper CRMP: Across the Kitchen Table Across the Kitchen Table continued on page 14 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023 13
CRMP: Across the Kitchen Table “When you compare a traditional loan to a reverse mortgage, it’s apples to apples, and 99 percent of people get it quickly,” he says. “Everyone knows what a traditional loan is. I explain how they’re the same and how they’re different. Seniors are sharp. They get it.” Clients turn to reverse mortgages for the ability to stay at home, to relieve the fear of outliving their resources and to supplement retirement income for a life of independence and joy. “Peace of mind and happiness are what we’re really offering,” Scheper says. “I try to stay away from the dollars, the cents, the percentages. Of course, you have to get to that, but the first step is asking, ‘What are your dreams? What are your hopes? What makes you happy? What feelings don’t you have now that you’d like to have?’” The answers never vary. Clients want feelings of independence and control over retirement, and that’s what the reverse mortgage delivers. They want to reduce stress and increase happiness. The CRMP is “a cool designation” that, like Scheper’s psychology degree, provides insights into the mindset of reverse mortgage borrowers. Among his other credentials, including certified senior adviser and senior residential specialist, he considers the CRMP the most important. “Why not be the best of the best?” he thought when deciding to get his CRMP. “It’s a must. It’s like dotting a lowercase ‘i’ or ‘j’ in English class. I needed the dot, and the dot was the CRMP.” The semiannual meetings of CRMP holders also give Scheper, licensed only in California, a coast-to-coast professional network. He can refer clients to trusted CRMP colleagues in other states, and they can refer Californians seeking reverse mortgages to him. The continuing education requirements needed to maintain the CRMP keep Scheper on top of industry trends. “Every time I take a continuing education class, I always learn something new because they keep the material fresh, new and updated,” he says. “It’s a designation that gives CRMPs that extra confidence, that extra boost in your walk to know that they’ve got the top designation in the industry.” As in the rest of the industry, the slowdown in reverse mortgages is taking its toll on Scheper’s business, although some clients are getting reverse mortgages “as a shelter, a safety net, just in case.” He is also preparing for the day when interest rates fall by building a pipeline of future customers. He calls them “be backs,” as in, “I’ll be back in touch with you.” Across the Kitchen Table continued from page 13 Financing Seniors’ Independence Serving Utah and Idaho for Over 20 Years being customer oriented and find loans that are tailor made for 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 / SEPTEMBER–OCTOBER 2023
CRMP: Across the Kitchen Table “These clients may not fund a loan for a year or two, but that’s OK,” Scheper says. “I’m building a nice list for the future. I’ll totally be in front of them. I SIT a lot— SIT is my acronym for stay in touch. I SIT and wait. I stay in touch, and boy, oh boy, does it work.” His five-person team is “lean and mean,” capable of pivoting quickly and equipped for responsiveness. “God gave us two ears and one mouth,” he advises them. “Use them proportionally. The culture in our company is listen, listen and listen.” Scheper oversees a culture of “teamwork, collaboration and gratitude.” He takes a similar approach with his bank partners—sending cookies, showing appreciation and initiating dialogue to keep the lines of communication open. Outside of reverse mortgages, Scheper is a motivational speaker and author of The ABC’s of Self-Improvement: The Psychology of Improving. Scheper and Gigi, a community volunteer and part-time nurse, spend time with their two kids, who live locally, and their two pugs. Scheper believes in giving back to the community, but there’s a twist. He doesn’t spread himself thin across causes but gives his all to the two that speak to his heart. As a former student-athlete, the fun one is volunteering as a public address announcer for local high school baseball and football games. “That’s how I get my sports in me,” he says. “I get to be with kids 16 to 18 years old and with the coaching staff and the administration.” His other cause is the lifesaving one, as a former board member and active volunteer with the Orange County chapter of the Juvenile Diabetes Research Foundation. Whether he’s supporting the jog-a-thon or the annual gala, he’s honoring his brother, Bob, who died from complications stemming from Type 1 diabetes in 1994. He tries to provide education and hope to newly diagnosed members, welcoming them with a “don’t be discouraged” kit. “I still have that quest to fund research and cure diabetes,” he says. “And it’s fun, too, to meet people. It’s a little subgroup where you meet with people who were diagnosed and say, ‘Don’t worry. There’s a game plan.’ It’s all about a positive attitude.” At heart, Scheper is an educator. He is out there helping clients pursue the American dream of owning their own home while also helping seniors live “the New American dream, which is to live in your home forever.” “Providing a solution to their fear of outliving their money is meaningful and impactful,” he says. “Helping seniors stretch out their retirement years by converting home equity into cash gives me purpose and passion. My impact is helping seniors retire with a sense of comfort and control and inner peace.” REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023 15
Staying Ahead With Servicing continued on page 20 REVERSE MORTGAGE BORROWERS can tap into online tools to manage most aspects of their loans. But their faith in technology only goes so far. Borrowers often call in to make sure their online requests were picked up, even if they were sent a confirmation via email, says Marion McDougall, CEO of Celink, a reverse mortgage subservicer based in Lansing, MI. “There’s still that little bit of hesitation that we see,” she says, noting that Celink has been working to address the issue. One solution is the company’s voice-response phone system, which uses predictive analytics to anticipate why a borrower is calling. The system might know that the caller recently initiated a withdrawal from a line of credit, for example, and thus leads off with a message that the request has been received. Servicers Innovate With New Technologies and Evolving Customer Expectations By Joel Berg STAYING AHEAD SERVICING with 18 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
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Staying Ahead With Servicing continued from page 18 “Maybe they say, ‘Oh, OK, I’m good,’” McDougall says. “But if they are not, they can still hit [the pound sign] and speak to someone. It’s all about giving borrowers the information they need.” Celink’s evolving phone system reflects two of the chief trends in reverse mortgage servicing: the growing acceptance of technology among customers and the growing use of technology behind the scenes to make servicing more efficient. Technology, however, is just one of several factors changing the face of reverse mortgage servicing. Experts pointed to federal policy changes that are making the process more efficient, as well as the potential role servicers could play in expanding the market for reverse mortgages. “Education and communication are key,” says Richard Burke III, senior vice president and head of servicing, vendor risk management and post-closing for Longbridge Financial LLC. All-of-the-Above Communications It’s been said the COVID-19 pandemic accelerated the use of technology among seniors. Older people often had little choice but to turn to cellphones and computers for communication and connection. Now that people once again have choices, the focus is on allowing them to communicate in whatever format they prefer, McDougall says. Nonetheless, digital channels continue to grow faster than expected, she adds. About 50 percent of Celink’s borrowers are requesting their lines of credit through an online portal, blowing past the company’s goal of 30 to 35 percent. The goal is now 60 percent. “We’re constantly moving the needle,” McDougall says. Phone calls often follow, however, as borrowers look for reassurance that their digitally initiated requests are being processed. Celink leans on its understanding of borrower behavior, especially since borrowers often are reacting to actions or messages from the company itself, McDougall says. In addition to its focus on routine transactions, Celink has created messages designed to assist in what is often the most complex issue for a reverse mortgage: the death of the last surviving borrower. To educate borrowers’ heirs, the company created a video explaining what they need to know and walking them through the various required documents. The goal is to reduce anxiety and make the process smoother, McDougall says. “It’s not that we don’t want to talk to the heirs, but we believe their satisfaction is much greater the fewer times we go back and forth with them,” she explains. Internal Affairs Other technologies are streamlining the internal processes for servicers primarily by automating repetitive functions that don’t require human intervention. Celink, for example, has deployed nearly 50 so-called “robots” at various points of the servicing process, McDougall says. Robots—essentially bots built into a computer system—also are being used by PHH, says Michael Kent, president of PHH Mortgage/ Liberty Reverse Mortgage, based in Rancho Cordova, CA, and co-chair of NRMLA’s Board of Directors. When staff members do need to step in, they can rely on the system to queue up whatever is next for a given loan. “The system is very workflow driven,” Kent says. One challenge for the deployment of technology in the reverse mortgage space is the return on investment. Because the volume is smaller than in the forward market, it takes longer to recoup the spending on more efficient processes. PHH, however, can use about 60 percent of its forward-servicing technology in the reverse market. “That really gives us a huge advantage when it comes to serving our customers,” Kent says. Michael Kent Richard Burke III Marion McDougall 20 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023
As they adapt to current trends in technology use, servicers also need to keep an eye on the future. That includes technologies such as artificial intelligence (AI), which has fueled bright hopes and serious concerns in recent months. “We have some ideas about how great it could be. We also have some fears that we need to work through,” Kent says. “But I think AI could offer some really incredible solutions down the road as it’s perfected and implemented.” Regardless of how the technology develops, Kent sees a continuing role for the human element in servicing reverse mortgages. “As much as we need to be on the cutting edge from a technology standpoint, we have to be on, and I think we are on, the cutting edge of customer service, which means you have to meet people where they are,” he says. Processing Policy Changes In addition to technological changes, servicers are embracing recent policy pronouncements from the Federal Housing Administration designed to streamline processing. In May, the agency issued a letter making several tweaks designed to speed up payments to mortgagees when they assign a HECM to the U.S. Department of Housing and Urban Development. The changes include: • Lowering the minimum loan balance required to submit an assignment claim for review from 97.5 percent of the maximum claim amount to 97 percent; • Allowing mortgagees to submit original notes and mortgages no later than 90 days after the assignment claim payment date; and • Modifying the supporting documentation mortgagees must submit to be eligible for preliminary title approval. “The Home Equity Conversion Mortgage program is an important resource for the nation’s senior homeowners who wish to age in place,” Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said in a statement at the time. “Today’s changes simplify processes and pay mortgagee claims more quickly, providing meaningful relief to program participants as they navigate the unique challenges of today’s economic environment.” The reverse industry is now working with federal regulators to develop better loss-mitigation tools, Kent says. That could include programs to help seniors stay in their homes or to streamline the process of terminating a loan after the final borrower has left the home. “These are issues that the Federal Housing Commissioner’s office can get their arms around, work with industry and come up with creative solutions, as opposed to solutions that might have budgetary implications or require legislative action, which can be a fairly big issue,” Kent says. One fairly successful loss mitigation tool has been the Housing Assistance Fund. Created by the American Rescue Plan Act in 2021, the $10 billion fund has been doling out money to homeowners at risk of foreclosure across the United States, including owners with HECMs. Celink has been promoting the program, McDougall says, noting the company has arranged assistance for about 300 of its borrowers. “It’s been a huge success for us,” she adds. Growing the Pool Like the rest of the reverse mortgage industry, servicers are eager to see the market grow, particularly as people look for ways to extend their retirement savings. For McDougall, that could include helping new originators understand the HECM and dispel any misconceptions still associated with the product. “One of our key strategies over the next 24 months is to leverage our deep understanding of the product to help educate others on how servicing works for reverse mortgages and to articulate all the positive changes that have been made to the program over the past ten years,” she says. While new entrants would heighten competition, they would also increase the profile of the product, ideally leading to a bigger market for all originators. “If we got another one or two big banks again in the market Staying Ahead With Servicing continued on page 22 REVERSE MORTGAGE / SEPTEMBER–OCTOBER 2023 21
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