Preventing Common Hangups at the Reverse Mortgage Closing Table

The reverse mortgage closing is a highly anticipated event both for borrowers and for originators. At this point, after weeks or sometimes months of education and working through the application, the reverse mortgage is finally close to fruition. Yet there can be roadblocks even at this late stage in the process.

And with reverse mortgage professionals currently working to educate other financial professionals on the merits of reverse mortgages, smooth loan closings are even more important than ever.

“Many of us are trying to migrate toward financial advisors, CPAs, Realtors and others,” Clayton Behm, a reverse mortgage originator with Retirement Funding Solutions, said. “Just think, if you have a closing that was not successful, do you think you’ll get another referral from that financial advisor?”

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Panelists at the National Reverse Mortgage Lenders Association’s Western Regional Meeting weighed in on some of the pitfalls associated with the reverse mortgage finish line, as well as some tips to avoid them.

Attend the closing — Ideally, the loan originator will attend the closing, Megan Hafenstein, vice president of title and settlement company Allegiant Reverse, said. This way, the originator is a familiar face who can be available should any questions come up during the signing of closing documents. However, in today’s lending environment, loan officers who originate via call center settings are not local to the borrower, and may not be able to attend the closing.

“If it’s not [possible to attend], we still need to ensure all goes smoothly,” she said. “Make sure your phone number is readily available to the notary and the borrower. Our staff has their numbers available and are willing to take phone calls.”

Prepare pre-closing — An alternative to attending the closing is a pre-closing call, during which the originator can answer any questions about terms, cash being taken out, rates, and other items so that these items don’t come up during the closing itself.

Sending a document package for the borrower to review prior to closing can also be a helpful way to address any outstanding issues before the closing takes place.

“I like to e-mail the complete package to the borrowers, or at least amortization schedule and fee page, and make sure it’s all right and we are in agreement,” Behr said.

Make sure the borrowers have ID — It is a simple requirement of closing and the notary will need to verify the borrower’s identification. Sometimes, however, borrowers are unaware that they will need identification and don’t have a state-issued driver’s license on hand.

“Make sure they have a valid government-issued ID,” Hafenstein said. “That should be asked at the onset of the process [in order] to see what alternatives will enable them to sign.”

Don’t rely on the notary to answer loan-specific questions — The notary’s role is to verify identification and collect signatures, not to be a reverse mortgage loan expert.

“The notary should not explain the documents,” Ami Kellogg, president of of Premier Reverse Closings, said.

Be clear upfront — Ultimately the most common questions from borrowers at signing are around loan basics, Hafenstein said.

“The most common question or area of confusion continues to be the borrower not being comfortable with the product itself or the terms,” she said.

Originators should see the process through from start to finish, including the closing table.

“Make yourself available,” Elly Johnson, vice president and COO of United Northern Mortgage, said. “You made the commitment. Make sure the borrower is there and happy. If the loan originator is committed, addressing as much as possible upfront and being in constant contact prior to settlement, there’s no reason it should be anything less than total satisfaction.”

Written by Elizabeth Ecker

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  • Rule 1: Be at the closing in person If you absolutely can’t get to the closing, abide by; Rule 2: Be at the closing via Skype, Facetime or just the phone.

  • These are all very good points brought up in the article.

    Jim Spray is right on target with his comment. Many times rule # 1 can’t be achieved but rule # 2 can be achieved a great deal of the time!

    Another point in the article I would like to mention that Clayton Behm with RFS brought up was about a closing that was not successful.

    First off, we must know why the closing was not successful, it may NOT have been the error of the mortgage firm or closing agent. In fact, it could have been a last minute occurrence that no one had any control over.

    The point I am trying to make is that it does not mean you will not get another referral from a financial advisor, CPA or Realtor if a closing was unsuccessful!

    Knowing what the problem was and facing the financial advisor head on to discus it in detail may save the day. This may also be a reason you will get another chance to prove yourself. Remember, I am only referring to an indecent where the mortgage company had some responsibility with the problems of the closing!

    All in all, the article was very helpful!

    John A. Smaldone
    http://www.hanover-financial.com

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