Biggest Reverse Mortgage News of 2009

The reverse mortgage industry has been through more changes than anyone could’ve predicted over the last 12 months and 2010 will bring more of the same.

As the year comes to a close, take a look at the top 10 reverse mortgage news stories of 2009 (based on page views):

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  1. Senior Lending Network Halts Applications, Looks For Buyer or Additional Capital 
  2. HUD Lowers Principal Limit Factors for FHA Reverse Mortgage Program 
  3. House Passes Stimulus Bill, Reverse Mortgage Provision Included 
  4. Reverse Mortgage Loan Limit Increase Included In New Stimulus Plan 
  5. Reverse Mortgage Secondary Market Shifts from Fannie Mae to Ginnie 
  6. Fannie Mae Pricing Change Brings Higher Margins For Reverse Mortgages 
  7. New IndyMac Owners Bring Layoffs To Financial Freedom 
  8. Fannie Mae and T&I Defaults, Significant Issues Facing Reverse Mortgage Industry 
  9. Consumer Reports Puts Reverse Mortgages On Its List of Financial Scams, Why? 
  10. HUD Considering New Reverse Mortgage Product

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  • Kudos to John and his team for another great year of relevant information and top of the morning entertainment. Wishing you all a prosperous 2010…

    -Kevin Reichard
    Coral Springs, Florida

  • Item 4: ATTENTION–ATTENTION—ATTENTION ALL LOAN ORIGINATORS, RETAIL FHA HECM COMPANIES, WHOLESALE FHA
    HECM COMPANIES, HUD OFFICIALS, AND ATTORNEYS GENERAL NATIONWIDE; Yesterday, I stated on RMD that an 86 year old Client of mine had contacted me about several calls from “someone–A really nice man, Jim” about new money available to my client because of the Obama Stemulus Package. I asked the dear Lady who lives alone (Her nearest relative is a Daughter 700 miles away in the Bay area.) to send me whatever paperwork she had. I asked her did the man ever say it was an FHA Reverse Mortgage Re-finance? The Lady said no (Of course, I'm sure the man would deny any subterfuge.) Now understand, the Lady has an adjustable Rate Mortgage now held by Bank Of America which grows by approximately 4% on the unused Line of Credit. That fund is currently about $143,000, more than adequate for her financial needs today. Sure enough,
    when the paperwork arrived it was an FHA HECM Refinance–On the HUD Anti-Churning Disclosure (A great feature, Thanks HUD) it states $15, 046.37 is the total cost; on the Reverse Mortgage Detailed Comparison Page it states the Finananced Fees and Costs to be $11, 595.00 and the Net Available To You to be $155,762.32. Therefore, this Mortgage Broker is asking my Client and Friend to pay at least $11,595 to increase her Line of Credit by almost $13,000. Talk about a RIP-OFF, in my opinion. All under the Sales Guise of extra money under Obama's Stimulus Package with no mention of an FHA HECM Refinannce. This Broker is in Henderson, Nevada; all contact has been by telephone and the Application sent by Fed-X. My very independent 86 year old Client and Friend is heavily medicated and struggling to survive in her home alone. Thank Heavens She contacted me to ask what She should do and what the Company was talking about. LOAN ORIGINATOTS AND COMPANIES: Contact your former Clients to see if they are being duped like mine. HUD: On FHA HECM refinances I believe there should be a top cover sheet in Huge Print: SENIORS–THIS IS AN FHA HECM REFINANCE APPLICATION DOCUMENT. YOUR CURRENT LINE OF CREDIT IS——————YOUR REFINANCE FEES WILL BE—————-YOUR INCREASED LINE OF CREDIT WILL BE—————-BEFORE SIGNING THESE PAPERS CONSULT WITH A RELATIVE OR TRUSTED FINANCIAL ADVISOR OR YOUR CURRENT LENDER OR YOUR FORMER FHA HECM LOAN ORIGINATOR TO ENSURE THIS REFINANCE MAKES GOOD ECONOMIC SENSE!!!!!!!! I suspect if this Company is preying upon Older, Sick Seniors in this fashion, other Companies across the Country may as well. I intend to contact The Washington State Department of Financial Institutions to complain about this Sales and Marketing tactic today.

  • This is terrible but unfortunately happens more than we think. These companies only care about their $$ not about the senior. They should be punished for this type of behavior! Absolutely terrible!

  • Are you in the business? I really hope not. No reverse bank is going to allow this to be approved. All reverse banks have guidelines that enforce a certain amount of cash to closing costs. This loan will not be approved by any bank. If they are going from an adjustable to a fixed then it can go through with minimal increase in cash. Well atleast with BOA, and Metlife. Sounds like she is talking to an LO who doesnt know what he/she is doing. There arent any type of reverses except for HECM's anymore. I think you should contact one of the reps at one of the banks you do wholesale business with before you start contacting anyone else. Learn your product inside an out.

    As far as the Obama comment. That is typical weak sales jargon done by 90% of loan officers. I have heard it in every office I ever worked in. I dont agree with it, but it will always be around.

  • One of my former clients I've placed with Financial Freedom have contacted me, asking if it'd make sense for them to refinance. She asked because Financial Freedom sent a letter, asking her to contact them to see if it'd make sense to refinance.

    I'm bummed because she's my client, not Financial Freedom's. I suspect the letter is going to all my clients I've placed with them.

    >>There arent any type of reverses except for HECM's anymore.

    That's an incorrect statement Ricky – Bank of America offers two Jumbo programs via the retail channel.

    • Yes, you are correct. I should have been clearer. I was talking about the private investors that gave away “reverse mortgage”. I was talking about his sitaution that isnt a jumbo loan.

      BTW all banks have been doing that since the begining of time. I always mail my clients every 1/4 to stay in touch. Gotta stay on top of your game. I learned the hard way.

  • Are you out of your mind, Ricky “Tricky” Young: This unscrupulous Mortgage Broker should ( and I hope will) be stopped from doing business.
    in the State of Washington. To say you “hope” I am not “in the business” is
    extremely stupid. How old are you anyway? This activity upset my Client and friend immensely. It's “Kids” like you who ought to be “run” out of the reverse mortgage business. You obviously have no conception how Seniors can be taken advantage of by “a really nice man” over the telephone. The Attorneys at The Washington State Department of Institutions have been notified and this type of Sales and Marketing practices will be stopped when
    found. Every honest and caring Reverse Mortgage person at whatever level should react the same way when such Companies attack their Clients in such a sleazy way. By the way, the Lady informed me today I had forgotten: She is 88, not 86.

    • I am 31. I am far from a kid. Sounds like you are just upset that your client actually started giving her information away to someone else. Once again, no bank will approve the loan. Once it gets to underwriting it will get denied. The bank protects her. You send out this huge over dramatic message when everyone knows. He isnt ” unscrupulous” bc if he knew anything he would realize he is wasting his time bc no bank will approve it. So you just reported a guy that doesnt know what he is doing. Not someone who is trying to get over on your client. I care about my clients. Like I said learn your products.

  • Believe me “Tricky Ricky”, you are a kid in more ways than one. It wasn't just the Reverse Mortgage I was objecting to–it was the sleazy way this out of state mortgage broker went about contacting and flim-flaming my Friend about additional money because of the Obama Stimulus Package. Of course at your age, you think that action is alright. I guarantee you that there a lot of others (Federal as well as State Officials) in the Reverse Mortgage Industry who think this kind of Marketing and Sales techniques are just flat out wrong. . 31, huh, you are really wet behind the ears; if I had anything to say about it, you wouldn't be working in the Industry where protection for Seniors and their money is of utmost importance. As far as not reporting him: If the Mortgage Broker doesn't know what he is doing, he shouldn't be doing it. If more folks in the reverse mortgage industry would report such activity, maybe the Reverse Mortgage would have a better image.

    • James I have been in the mortgage business for almost ten years. I live in Ny which I think was the center for destroying the banking industry. I started doing reverses only two years ago. I closed 47 this past year. Not to bad for being wet behind the ears? As I said in my previous post I dont agree with weak sales jargon. Yet, I have heard it all and nothing surprises me. I do and dont agree with he shouldnt be doing it. What happens if he just started last week? We are not robots and people will make mistakes as you also thought this loan could go through. Should you not be doing this type of work? You are going to see a lot of issues as I see everyday brokers trying to tap into the reverse mortgage industry. I have heard the growth rate explained as an interest baring account by a company that is on the top ten for reverses units closed this past year. Its just the nature of any sales job. There are going to be good and bad apples. If i were you I would just inform your client to stay away from a fixed rate hecm before she does get someone on the phone who knows how to churn her. The banking industry will never have a good image. You just have to shine past the competition and do the right thing. You can insult me all you want I know that this wet behind the ears kid knows the program better then you. Not one of my closed reverse clients would even give another broker an ear bc I have such a tight relationship with 99% of them.

  • Ricky and James,

    This type of marketing represents the most serious type of problem in our marketing today. Marketing designed simply to entice a response. There is no concern for truth or reasonableness in the content. What makes it worse is the lack of integrity in the originator.

    It really does not matter how green or how young the marketer is, it is wrong. It was marketing like this that turned Senator McCaskill against us. It is indeed disturbing that an older woman would be troubled with such trash.

    Per the HUD OIG, there are criminal gangs working seniors regarding their reverse mortgages. How do we know this is really so innocent and there is not some type of fraud involved?

    James, you were right to send it in and it is good you reported it here but this is not the place where it should go. It should have gone to the FTC and HUD as well. However, more fundamentally we need the resputation of being self-policing. Your prejudice against Peter Bell is deplorable. NRMLA needs this kind of information so that the industry can follow up and make sure action is being taken. You may not like Peter's career path or personality but this is not just a state of Washington issue. Peter and NRMLA do an outstanding job for the industry. You need to let NRMLA do its job but still take the action you did.

    Ricky, you are young but you are no youngster. James and I know how seniors are negatively impacted by this kind of scam. There is no excuse for this type of mailer. If you are right as you most likely are, the broker who is supposedly supervising this person should be severly reprimanded. So that the originator is held accountable, it should go into his/her license file. Let that person explain it away to the next employer.

    Many of us want a more professional image to the industry. This type of marketing and sales tactics is deplorable and makes us all look like “bogus
    reverse mortgage peddlers.”

    • I dont know about everyone else but this sounds like a cold call. How did they get in touch with your client? In my opinion there are more important people to go after for scamming not someone who clearly doesnt know what they are doing.

      • Ricky,

        Please see James's comment below.

        BUT let's say you were right. An employee is the agent of the employer that is why HUD requires all FHA loan originators be employees. HUD expects that all marketing is reveiwed and overseen by the employer whether it is a cold call, mail piece, website, an ad, or some other method of communication. It is all the same.

        Employers must supervise but some are derelict. Some employees act as if they are accountable to no one. Either way, action should be taken based solely on the prior comments of James. Let the authorities that be decide on the appropriate action.

  • Dear Mr. Young: 47 in a year–in this RM enviorment, you are a hard worker and need to be congratulated. I hope your Company realizes what an asset you truly are. And one more thing, nobody does such volume without taking good care of their clients. Ricky, I salute you. Now like a man said who I interviewed once on a radio program I had many years ago, “Let me tell you the rest of the story.” (The one and only Mr. Paul Harvey) Numerous telephone calls were made first to my client, causing this 88 year old Lady to think she was about to lose out on a bunch of “Free Money”, a result of the Obama Stimulus Package. Nothing was ever said about an FHA HECM Re-finance (Let alone the words Reverse Mortgage) Then, a complete FHA HECM Re-finance Application was mailed to her. The cover letter had “Government Loan” featured in the upper right hand corner of the page.
    (We both know that's a flat out lie: Government Insurance yes, loan no).
    The Company did have the words “Reverse Mortgage Comparison Page”
    in the third paragraph but my confused 88 year old Client and Friend missed that all together. (Frankly she never read much of it; she just wanted the Company to stop badgering her to just sign the high-lited documents and return them in the Fed-x envelope.) Also, somewhere on the page in bold print was information about Counseling which the Company was arranging for her, I think (I've returned the documents to the Lady who plans to forward the material to the Department of Financial Institutions with a cover letter.) Too, the name on the Company cover letter was diffferent than the loan Officer's name on the Application, not illegal perhaps just noted. My call to a Key Attorney at the Washingtin State Department of Financial Institutions was well received and appreciated. I learned the Department had received other complaints about this Company. I assure you, Mr Young, their Reverse Mortgage Marketing tactics in the State of Washington will change. I hate thievery and deceit no matter where I encounter such activity.; I trust you do as well. You are a fine man, Mr Taylor, and a tribute to your profession.

    • James,

      It is disappointing to read you are focused solely on the state of Washington. You do the rest of us a huge disservice. The state of Washington can do little to a company in Nevada if they have no presence in Washington.

      Since all HECM origination is controlled by HUD, why not provide the HUD OIG with this information and the FTC? You should also be reporting it to NRMLA. This is a significant part of what NRMLA does.

      I agree with what you have gone but it is hardly what it should be.

  • Stand in line, Mr. Critic, my poor, suffering Wife claims I have disappointed her day and night (perish the thoughts) for 41 years. C'est La Vie.

  • This whole issue had been close to my heart for years and I have over 30 in the mortgage industry so you have some idea of my experience.

    My main concern has always been the customer so I am not rich, but comfortable. I believe I have seen every type of advertizing and scam and reported my share or talked my customer into doing so although they shun any limelight whether good or bad.

    Knowing our products and the fact that a loan should not be approved is helpful but not reporting such an incident is only allowing more of the same that can cause another senior more unnecessary grief – and the possibility they will be put into a fixed product at some point that is not in their best interest but beyond their current capacity to refuse (yes, they sometimes feel it is the only way to stop the phone calls) and find themselves in a bad situation that will only cost them more money to get out of. I was once sitting across from a customer who was trying to tell a reverse mortgage LO he did not want the loan and the man so berated him the customer's face got bright red and I feared for his health. So please report such incidents to every party that may have some influence to stop the practice, don't just stop at one agency.

    What I find sad is that people put their own income as more important than the welfare of a senior (or any customer, for that matter). Some are individuals that need to make income for whatever purpose (too often sheer greed) and some work for companies that stress production at all costs. Both of these situations are difficult to change, especially in today's economy. Worse yet is that HUD guidelines and caps (though well intentioned) are not always in line with practices that allow a business to make sufficient income to not stress more production. It is sometimes a difficult line we walk trying to make a living and to also do our best to put our customers in the proper loan for their needs, but many of us are doing it in spite of income needs and are doing fine. (Oh, my pet peeve is the lender who had RMs available a few years ago but put the senior into a forward mortgage with payments they had to struggle with even then.) We can only do our best to assure that others are looking to the old golden rule rather than focus on the slickest marketing schemes to feed their greed. Age old battle, but we can't let up. So I ask you all to put your energy to better use that sparring with each other. Take advantage of the association we have access to and help set up a program to make reporting such incidents to several sources at one time with the backing of the association. Sounds like you both are very capable individuals and this may be the best use of your energies and capabilities through a source dedicated to this part of the industry. Good luck and thanks for being part of the “good guys” that try so hard to take care of our customers. Cudos for the fine work there.

  • This whole issue had been close to my heart for years and I have over 30 in the mortgage industry so you have some idea of my experience.rnrnMy main concern has always been the customer so I am not rich, but comfortable. I believe I have seen every type of advertizing and scam and reported my share or talked my customer into doing so although they shun any limelight whether good or bad.rnrnKnowing our products and the fact that a loan should not be approved is helpful but not reporting such an incident is only allowing more of the same that can cause another senior more unnecessary grief – and the possibility they will be put into a fixed product at some point that is not in their best interest but beyond their current capacity to refuse (yes, they sometimes feel it is the only way to stop the phone calls) and find themselves in a bad situation that will only cost them more money to get out of. I was once sitting across from a customer who was trying to tell a reverse mortgage LO he did not want the loan and the man so berated him the customer’s face got bright red and I feared for his health. So please report such incidents to every party that may have some influence to stop the practice, don’t just stop at one agency.rnrnWhat I find sad is that people put their own income as more important than the welfare of a senior (or any customer, for that matter). Some are individuals that need to make income for whatever purpose (too often sheer greed) and some work for companies that stress production at all costs. Both of these situations are difficult to change, especially in today’s economy. Worse yet is that HUD guidelines and caps (though well intentioned) are not always in line with practices that allow a business to make sufficient income to not stress more production. It is sometimes a difficult line we walk trying to make a living and to also do our best to put our customers in the proper loan for their needs, but many of us are doing it in spite of income needs and are doing fine. (Oh, my pet peeve is the lender who had RMs available a few years ago but put the senior into a forward mortgage with payments they had to struggle with even then.) We can only do our best to assure that others are looking to the old golden rule rather than focus on the slickest marketing schemes to feed their greed. Age old battle, but we can’t let up. So I ask you all to put your energy to better use that sparring with each other. Take advantage of the association we have access to and help set up a program to make reporting such incidents to several sources at one time with the backing of the association. Sounds like you both are very capable individuals and this may be the best use of your energies and capabilities through a source dedicated to this part of the industry. Good luck and thanks for being part of the “good guys” that try so hard to take care of our customers. Cudos for the fine work there.

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