The Education of Reza Jahangiri and the Rise of

Transcription

Reverse Mortgage
July-August 2015
Volume 8, No. 4
The official magazine of the National Reverse Mortgage Lenders Association
INSIDE:
First interview with
DAS Ed Golding
P.7
The Business of Counseling
P.21
Welcome LESA
P.28
www.nrmlaonline.org
The Education of
Reza Jahangiri
and the Rise of
PRSRT STD
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July-August 2015
Volume 8, No. 4
Contents
PUBLISHER
Peter Bell
pbell@dworbell.com
EDITOR
Marty Bell
mbell@dworbell.com
12 The
Education of Reza Jahangiri
and the Rise of AAG
How team and culture built the leading lender
By Marty Bell
ASSOCIATE EDITOR
Darryl Hicks
dhicks@dworbell.com
SPECIAL SECTION: THE BUSINESS OF COUNSELING
Jessica Hoefer
21 Sustaining Counseling:
Great idea, valuable service, but underfunded
STAFF WRITER
By Mark Olshaker
A talk with HUD’s John Olmstead |
By Jessica Hoefer
COMMUNICATIONS COORDINATOR
EXECUTIVE VICE PRESIDENT
Stephen Irwin
NRMLA EXECUTIVE
COMMITTEE CO-CHAIRS
By Darryl Hicks
25 A Day in the Life of a Counselor
Joe DeMarkey, Reverse Mortgage Funding
Reza Jahangiri, AAG
DESIGNER
Lisa Toji-Blank, Toji Design
Sarah Aaronson
sarahaaronson@comcast.net
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
Linda Latimore at 202-939-1793.
Advertising and editorial inquiries
should be directed to 202-939-1745 or
mbell@dworbell.com.
Association & Subscription Contact:
National Reverse Mortgage
Lenders Association
1400 16th St., NW, Suite 420
Washington, DC 20036
202-939-1760
llatimore@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
mbell@dworbell.com
©2015 National Reverse Mortgage
Lenders Association
7
24
The Ongoing Evolution of
HECM Counseling:
Mark Olshaker
ADVERTISING SALES
Talking Heads
Ed Golding, HUD:
New Principal DAS for
Housing Discusses
Priorities
Columns
3 InTheReverse
Drama of Business
5 Peter Bell: Balanced Viewpoint
30 CRMP: Across the Kitchen Table
|
Fred Thompson:
Celebrity Colleague
18
By Marty Bell
Preparing for the New Era
Aloha Spirit: Originating in Hawaii |
By Larry Lau
Monthly Features
4Scribes
10 Borrower Chronicles:
32 Member News/Member Profiles
34Bulletins:
36Numbers:
Meet this month’s contributors
Our HECM Lets Us Do Good Things |
Who’s Who in Reverse Mortgages
Welcome LESA
Some Borrowers’
New Best Friend
By Mark Olshaker
News from NRMLA, Washington and beyond
The Shifting Top Ten
By Paul Fiore
28
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2
R E V E R S E M O RT G A G E / J U LY- A U G U S T 2 0 1 5
In Reverse
The Drama of Business
SAGAS OF HOW BUSINESSES ARE CREATED AND
Read our Weekly Report
and in each case ended up with the same subject, AAG.
(The Education of Reza Jahangiri and the Rise of AAG,
p. 12) Over time, we intend to cover a wide swath of companies large and small who provide a variety of services to
each other and to elder Americans
While we’re on serving elder Americans, one of the
more impressive features of the reverse mortgage process
to me has been the creation of a third-party counseling
network. While a government statute can make such a
process mandatory, it is then left in the hands of private
businesses to sustain themselves. This month we asked our
staff to report on The Business of Counseling. Staff writer
Mark Olshaker surveys the industry and assesses their
needs (p. 21); Darryl Hicks speaks with HUD Housing
Specialist John Olmstead, who has been with the Office of
Housing Counseling since its inception in 2012, on future
plans (p. 24); and our newest staff member, Communications Coordinator Jessica Hoefer walks you through
“A Day in the Life of a Counselor” (p.26)
It’s still too early in the implementation process to stop
explaining the idiosyncrasies of financial assessment. So in
“Welcome LESA” (p. 28 ), AAG’s Paul Fiore introduces you
to the Life Expectancy Set Aside to help borrowers fulfill
their loan obligations.
A paramount objective of any trade association is to
provide a forum in which members can share good ideas
and learn from each other. We hope that each company’s
story will inspire you. Early in my professional life, the
great journalist Jimmy Breslin once said to me, “Everyone
steals ideas. Just make sure you steal the good ones.”
Join NRMLA — nrmlaonline.org
Marty Bell, Editor
evolve have always piqued my interest. I find the epic
novels of Theodore Dreiser, the muckrakers of the turn of
the century, contemporary tales of Silicon Valley (including HBO’s comedic perspective) are all a fun and enlightening investment of time.
Perhaps this penchant comes from the fact that
NRMLA president and CEO Peter Bell and my father,
Jerry, started a two-person business from scratch in his
mid-twenties manufacturing medical equipment (canes,
walkers, bedrails) that grew into a publicly-traded company
with hundreds of employees in various locations. This saga
very much occupied and shaped our young lives. (Always
modest, when people asked him what he did, our father
would say, “We bend aluminum.”)
So it is with delight that this month we embark on a
new feature that I hope will become a staple, chronicling
the progress of NRMLA member companies. For our
launch, we could have gone alphabetically or by volume
Stay informed
R E V E R S E M O RT G A G E / J U LY- A U G U S T 2 0 1 5 3
Scribes
Meet This Month’s Contributors
Paul Fiore
Larry Lau, CRMP
(Meet LESA, p. 28)
As executive vice president of retail lending,
(CRMP: Across the
Kitchen Table, p. 30)
Paul is responsible for the management
Hawaii native Larry Lau is a Certified
and production of three loan officer call
Reverse Mortgage Professional. Most recently,
centers, staffed by approximately 260 loan
Larry joined the ranks of Security 1 Lending
officers, in Orange, CA, Atlanta, GA and New York, NY. Paul
as a Branch Manager. Larry was born and raised on the Big Island
started with AAG in June 2009 and has helped transform the sales
and is currently headquartered in Honolulu. Larry has a total of
function at one of the largest originators in the industry. Paul was
nine years with the Finance Industry and interestingly, he has orig-
previously the chief learning officer at Senior Lending Network
inated HECMs on five different Hawaiian Islands in that time.
(World Alliance Financial), where he developed Senior Lending
Mark Olshaker
Network University, a training program that coached loan officers
(Sustaining Counseling p. 21
and Borrower Chronicles, p. 10)
on how to sell reverse mortgages over the phone. He has been a
speaker at various NRMLA and MBA meetings on the topic of
our staff writer, is a best-selling author of
effective reverse mortgage sales strategies.
Darryl Hicks
(Talking Heads, p. 7)
is the Vice President, Communications
for NRMLA where he writes our Weekly
Report and administers our CRMP program. He roots for the Steelers and the
fiction and non-fiction and an accomplished
researcher in the areas of crime and medicine. Olshaker has written 14 books in all, including the New York
Times Number 1 bestseller “Mindhunters” and most recently “Law
& Disorder,” both with former FBI Agent John Douglas. He has
also produced 12 documentary films, the latest being Who Killed the
Lindbergh Baby? for NOVA on PBS. Olshaker is a former reporter
Phillies and reads books on World War II history as he rides
for the St. Louis Post-Dispatch, who now resides in Washington
the Metro to work each morning.
and has built a large following for his MindhuntersInc.com crime
blog, which argued
Jessica Hoefer
Amanda Knox’s
(A Day in the Life of a
Counselor, p. 25)
innocence from
is the Communications Coordinator for
Dworbell, Inc., where she is also the
Member Services Coordinator for NAIPC
and assists with the publication of Reverse Mortgage Magazine
and Tax Credit Advisor. She came to NRMLA from
the National Geographic Society. She is an avid
reader, a theatre junkie, and loves to travel.
4
the getgo.
Balanced
Viewpoint
Preparing for
the New Era
By Peter Bell, President of NRMLA
FOUR DEVELOPMENTS HAVE OCCURRED SINCE OUR
last issue of Reverse Mortgage magazine that launch the
business into a new era.
Financial assessment finally became an integral part of
the HECM origination process, in an effort to try to assure that these loans are made to homeowners who have
a likelihood of successful use of the tool to preserve their
ability to stay in their home as they age. Flexibility has
been provided for applicants with a marginal outlook for
success by permitting the use of set-asides and other tools
to compensate for borderline eligibility.
The non-borrowing spouse dilemma, an issue that has
confused many current and would-be borrowers and their
families, generated substantial adverse press and brought
closer regulatory scrutiny has been addressed – for the
most part – by HUD’s most recent policy. There are still
procedures to be determined and implemented, and communicated properly to those affected, but many aspects of
the issue have been put behind us.
The CFPB has fired a shot across the bow, telling the
reverse mortgage industry it doesn’t like the way we advertise our product. The Bureau has declined, thus far, to
explain explicitly what it thinks is wrong with the advertising and what would be more appropriate. Instead, they
have very publicly announced that their staff looked at
some ads and showed them to several small focus groups
and a few individual consumers – and all agreed that reverse mortgage ads are misleading. Newspapers around the
country granted the CFPB press machine the coverage it
sought and the story has been covered widely.
Finally, in just the past two months, 600,000 Boomers – my contemporaries – have entered the age cohort of
HECM borrowers. We’re turning 65 at the rate of 10,000
per day. Nearly 80% of us own our homes according to
a National Association of Realtors survey. The NRMLA/
RiskSpan Reverse Mortgage Market Index, a quarterly
measure of relative movement in home equity possessed
by homeowners age 62 and older, has nearly returned to
its pre-recession level. So the market
opportunity for reverse mortgages is
growing rapidly.
Together, these four items lead
us into a new era for the reverse
mortgage industry, an era that
offers enormous opportunity. Those
Peter Bell
capable of embracing the future will
understand what this means. Others might be dismissive and feel that the business is just
getting too hard, too regulated, and therefore no longer
worth the effort.
This new era calls for a sophisticated industry with a
workforce that is knowledgeable and intellectually curious
about demographic trends, issues of health and welfare, personal finance, money management and many other matters
associated with serving an aging clientele. On top of that,
we need reverse mortgage professionals with empathy and
compassion for our clients, who are able to understand that
no two households are alike and that at the stage of life
many of our clients deal with us, they need care, concern,
trustworthiness, accessibility, responsiveness and respect.
There is a lot for all of us to learn to become the sophisticated industry we must be to thrive and prosper from
the market opportunity blossoming before us. It’s time to
embrace the future and move forward. Building a stronger, smarter, more insightful reverse mortgage industry
has been part of NRMLA’s mission from the beginning.
You can count on NRMLA to use all of our channels, our
conferences, our committees (including a new education
committee just created by the Board at its June meeting),
the Certified Reverse Mortgage Professional (CRMP) designation, our publications, communications and websites
(including a new soon-to-be launched member website) to
help build the knowledge our industry’s professionals will
need. We hope you will all avail yourselves of the educational opportunities we present. It’s not every day that a
business gets an opportunity to re-invent itself. RM
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6
Talking
Heads
Edward Golding, HUD
New Principal DAS for Housing Discusses Priorities
ON HIS FIRST DAY AS PRINCIPAL DEPUTY ASSISTANT
Secretary for Housing, Edward Golding was asked by the
Office of Public Affairs to sit for his official photograph
– instead, as a playful joke, he considered sending over a
photo of Albert Einstein.
Five weeks later, when I shook Golding’s hand prior to
sitting for this interview, I noticed the resemblance right
away. And while he may not be a world-famous physicist,
Golding is a gifted economist, who has spent the past
quarter century working in the mortgage finance industry and advocating for policies that strengthen access to
affordable housing.
Most recently, he was a Senior Advisor to the Secretary
of Housing and Urban Development and one of the chief
architects behind the Administration’s policies on housing
finance reform. Golding began his career at the Federal
Home Loan Bank Board during the Savings and Loan Crisis
and then joined Freddie Mac, where for the next 23 years
he held a variety of senior positions from investor relations
to strategy and research.
Prior to his service at HUD, Edward Golding was
a Senior Fellow at the Urban Institute where he played
an instrumental role in launching the Housing Finance
Policy Center, a leading research voice on housing
finance matters.
In one of his first public interviews, Golding sat down
with Reverse Mortgage magazine to discuss his priorities for
the balance of the Obama Administration.
Reverse Mortgage: Do you see value in the Home
Equity Conversion Mortgage?
By Darryl Hicks
Ed Golding: The HECM can be a
very important tool because it provides a solution for people to age in
place and live in the single-family
housing of their choice for as long
as possible. When someone reaches
retirement age roughly half of their
Edward Golding
financial wealth is tied up in the
home. Most retirees don’t have large
bank accounts. They may have Social Security, a small
pension and a few IRAs. It’s important that they be able to
use the equity that has accumulated in the home for many
years, so yes, the reverse mortgage can be an important
tool when done right.
RM: Do you have concerns about any aspects of the
HECM? If so, what is the Department doing to address
these concerns?
EG: You want people to use their equity wisely and to
understand the terms of the mortgage. Education is so
important and reverse mortgages can be a complicated instrument. I’ve been in mortgage finance for a long time,
but I still find myself going back to our experts and asking
them what happens with the cash flows in a particular situation. Fortunately, a lot of the uncertainty with cash flows
happens further out. Life expectancies have been increasing, which is a good thing, but unlike a forward mortgage
which on average lasts seven years, with a reverse mortgage
you’re asking people to imagine their lives 15 years into
the future.
Talking Heads continued on page 8
Talking
Heads
Talking Heads continued from page 7
A 65-year old person who takes out a reverse mortgage today needs to imagine life at age 80. We did two
things to address these concerns, which included limiting
the amount of funds that can be dispersed upfront, so that
borrowers have access to their funds for a longer period of
time, and making sure that they have the proper resources
to pay property taxes and insurance. Those are two important protections, but I reiterate that borrowers need to be
adequately informed. It doesn’t matter whether you are 25
or 65 years old, there is a broad swath of financial sophistication that has nothing to do with intelligence. Some people
really get into understanding the numbers and contingencies, while others don’t have the energy or desire. Lenders
have an obligation to provide useful guidance, which may
include explaining reverse mortgages in a variety of ways, so
that consumers understand what they mean now and how
they could be impacted many years into the future.
RM: When you worked at Freddie Mac, did you ever
examine reverse mortgages as a product option?
EG: Not really, because if you look at its history, the
HECM was ideally suited to Fannie Mae. Fannie Mae was
created in 1938 to support FHA, while Freddie Mac was
formed in 1968 to support the savings and loan industry.
One area I would like to explore is whether we can expand
the number of investors that finance reverse mortgages.
It’s not always a natural product to go into Ginnie Mae
securities. Ginnie Mae has done a great job of providing
financing and it will continue to do so, but it would be
beneficial to have a diversified investor base.
RM: What can the industry do to assist HUD in its role as
both mortgage insurer and regulator of HECM lenders?
EG: As I mentioned earlier, education is a key component
of the HECM program, whether it is through direct contact
with clients or through advertising. This is an area where
I believe HUD and the industry can collaborate to make
sure the proper message is being delivered to potential
borrowers. The industry at large takes education seriously
and realizes that this product is not for everyone and that
some homeowners may be better served by other options.
On our end, FHA needs to ensure that our mortgagee letters provide clearer guidance and we’ll continue working
8
with the industry on this. We are also putting things into
the HECM Handbook (4235.1) so that you don’t have to
search for mortgagee letters and worry about which ones are
dated and which ones are superseded.
RM: Does the Office of Housing interface with CFPB
on policy matters? Sometimes it seems they’re moving in
opposite directions.
EG: The CFPB is an independent agency that enforces
a different set of statutes. We do have discussions with
CFPB staff from time to time. We want to make sure that
regulations are consistently enforced as much as possible
and that there is no unnecessary overlap, whether it’s with
disclosures or servicing.
RM: People who move up within an organization often
have some ideas they now have the opportunity to pursue.
Do you have ideas of your own for the HECM program?
EG: I want to explore how reverse mortgages are financed
and what can be done to diversify the investor base. We are
largely the only game in town and it would be nice if the
private market could develop some products. I think you’d
have a healthier market if it wasn’t all government.
RM: The Obama Administration has encouraged cross
departmental collaboration. HUD has worked closely
with Education, HHS, Treasury on Choice Neighborhoods, for instance. Is HUD working with the other
agencies on promoting and teaching approaches to
retirement funding?
EG: As noted above, we interface and meet with CFPB
on issues where there’s mutual interest and to support our
policies through their consumer protection and education
efforts. We also work with nine HUD-approved HECM
Counseling Agencies across the country to ensure that borrowers are well-educated about how the product works and
their options for post-retirement funding sources. In April,
we awarded $36 million in grants to hundreds of national,
regional, and local organizations to cover the costs of housing
counseling services, including HECM counseling. Additionally, we regularly interact with major reverse mortgage stakeholders, like NRMLA (as you know, we had several staff
at the recent NRMLA conference), to ensure that HECM
policies are best meeting consumer and lender needs. RM
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Borrower
Chronicles
Our HECM Lets Us Do
Good Things
By Mark Olshaker
WHEN MOST PEOPLE RETIRE, THEY WANT TO TAKE
time off, settle down and relax. Not so for Lawrence
“Larry” Grillo and his wife Linda, of Weymouth, Massachusetts. Though he is an avid golfer, when Larry retired
from sales and management in the pharmaceutical industry, he and Linda signed up to work part-time for FEMA,
the Federal Emergency Management Agency, where they
were dispatched to sites of natural disasters to aid survivors
with obtaining government assistance.
“We had a friend at FEMA and he thought we were
good candidates for this type of work,” Larry relates.
A reverse mortgage has allowed this dynamic couple to
pursue their interests and passions without worrying about
running out of money.
Though Linda is no longer involved with FEMA, Larry
remains on call, with each assignment requiring at least
a month-long commitment. During Hurricane Sandy
in 2012, he was dispatched to the devastated New Jersey
Shore where he helped the victims “get through the
bureaucratic maze.” Later in the same crisis, he worked in
New York City, contacting people who had had to leave
their homes, discerning their current status and gathering
information for HUD to help them return to their former
lives or, if necessary, resettle. He has been actively
involved with these emergency relief efforts for
10 years now.
Linda and Larry met more than 50 years ago at
Peabody High School, in the town of the same name
10 R E V E R S E
M O RT G A G E / J U LY- A U G U S T 2 0 1 5
north of Boston. Larry went to work here in the States for
the British pharmaceutical company Burroughs Wellcome.
After it merged with Glaxo, another British company, in
1995 to become the world’s third largest pharmaceutical
concern, Larry took early retirement and went to work
for PDI, Inc., a healthcare services contract sales organization. Larry put together and organized independent sales
teams to market products for both emerging and established companies. His main thrust was selling products for
drug giant Pfizer that didn’t mesh with those sold by its
in-house sales force.
Linda was trained as a teacher and opted to stay at
home when the first of their two sons was born. A few
years after the second boy came along, the Grillos adopted
a baby girl from Korea. Since then, backed by her experience in education and their accumulated wisdom, Linda
has become an advocate for adoptive parents and a highly
respected expert on emotional issues involving parents and
children of adoption, particularly from overseas. Problems,
such as acting out and fear of abandonment, were not as
well understood when the Grillos adopted, and Larry says
Linda is helping other parents relate and deal with these
challenges in ways they and others of their generation wish
they could have been helped.
When it came time to plan out their retirement years,
they were already familiar with the reverse
Borrower Chronicles continued on page 11
Borrower
Chronicles
Borrower Chronicles continued from page 10
mortgage concept and had seen it from two distinct perspectives. “Both of our parents had had reverse mortgages,”
Larry explains. “My parents had had a bad experience with
one of the early ones – you had to pay it back within a certain amount of time. My father didn’t figure he’d live that
long, so he wasn’t worried about it. But when both of them
were still alive when the payment came due and they didn’t
have the money to pay it off, my brothers and I decided
to take care of it. My mother and father both stayed in the
home until they passed away.”
Linda’s father, on the other hand, had the opposite
experience. When her mother died, her dad took out a
reverse mortgage and, together with his Social Security
payments, was able to live out his remaining years in comfort and security.
It was security, rather than any immediate financial
need, that motivated Linda and Larry to seek their own
HECM. “We decided to look into it,” says Larry, “to have
money to use if and when we needed it and not have to
burden our children.”
They contacted Reverse Mortgage Funding and
worked with HECM Loan Specialist Stephen Pepe. “It
was a pleasure working with Steve,” Larry recalls. “He’s
a real professional.” They paid off a home equity line of
credit to Bank of America.
“We use the reverse mortgage as a line of credit and
look on it as insurance, in case our retirement funds dry
up or property taxes rise, as they always seem to in Massachusetts.” What the HECM primarily brought was peace
of mind.
When Larry is not rushing off to disaster sites for
FEMA, he and Linda maintain an active lifestyle. They
go to the country club as often as they can and Larry plays
golf there several times a week. “We now have seven grandchildren, spread out over Massachusetts, New York and
Georgia, and we like to see them as often as we can. And
we want to keep travelling.”
And with regard to their living arrangements, because
of their reverse mortgage, Larry notes, “As long as we want
to, we can stay where we are.” RM
The Education of Reza Jahangiri
and the Rise of AAG
How team and culture built the leading lender
AT LUNCHTIME ON A FRIDAY AFTERNOON IN MAY,
the Break Room on the first floor of American Advisors
Group (AAG), headquarters in Orange, California, is
packed with employees lined up to make a $5 contribution to Willow International (formerly the Kwagala Project), a charity to support women rescued from human
trafficking in Uganda, and to taste 13 variations of chili
prepared by colleagues competing in a cook-off. Willow
is just one of the beneficiaries of the newly formed AAG
Foundation that is also now focusing on Alzheimer’s and
other senior issues. On the buffet you find beef chili, pork
chili, chicken chili, chocolate chili, white chili, and the vast
ethnic diversity of the staffers in line reflects the menu.
Reza Jahangiri, the company’s founder and CEO, enters
the room in slacks and an open neck dress shirt. Some of
the staffers circle around him, but the room doesn’t come to
a halt as rooms often do when the boss arrives. At 37 (and
yet already a business owner for 10 years), Jahangiri mixes in
with the crowd rather than assuming any empirical posture.
When Jahangiri founded the company as a broker and
a sideline to his primary businesses a decade ago, he had 10
employees. In 2010, when he decided to dive in full time and
By Marty Bell
began to build, he had 35. Earlier this year the company welcomed its one-thousandth associate and the packed training
rooms in the floors above indicate the growth continues. In 2014, AAG emerged as the leading lender in volume
in the reverse mortgage industry closing 13,297 loans, including both retail and wholesale. It has remained atop the
pack in 2015 with 4,830 loans through April, nearly twice
as many as any other lender. This is all the more remarkable
because as recently as 2010, AAG was not even among the
top ten lenders. The company now has monthly overhead
of $15 million and revenue of over $250 million.
The image of a chili cook-off may seem a minor point
in a story that chronicles the emergence of a business,
and yet it is a symbol of the corporate culture created by
Jahangiri with support from a small team of colleagues that
is the foundation for the company’s growth. In an industry
in which many companies are scattered across the country,
Jahangiri chose to build upon a centralized model with the
key executives and vast majority of managers and staff in
one location. AAG now occupies seven floors of the eight
story glass tower (an FBI office is on the eighth floor) on
The Exec Squad: Jahangiri, Verst, Fiore, McGrath and Mullins.
12 R E V E R S E
Reza Jahangiri continued on page 13
Reza Jahangiri continued from page 12
Chapman Avenue with a view into Angel’s Stadium from
many of the windows. Some departments have recently been
moved to another tower across the plaza. Congregating as a
company daily has enabled a sense of close teamwork, constant ongoing training with rapid and thorough response
to industry changes, face-to-face management, brainstorming when issues arise, opportunities for employees to grow
within the company structure, control, care for each other’s
families and the opportunity to share in fun with staff.
“I came from Dish Network,” says Martin Lenoir, the
chief marketing officer, “And this isn’t an aggressive, hardnosed, stressful environment. We want people to have a
well-rounded, balanced family life. Reza understands that
this is a marathon.”
“We are diligent about our strategy that everyone here
should really enjoy coming to work,” says Teague McGrath,
chief creative officer. “We bring the whole company
together for Town Halls to update them on everything
going on, we have golf tournaments and softball games.
And, we raise money and provide support for our employees in times of need.”
“Reza is very sensible,” says Kimberly Smith, Senior Vice
President, Wholesale. “Actually Reza is frighteningly sensible.”
“In addition to our strong culture, I think we have
the right ingredients of the right business model at a challenging time with the right people running it and capital
behind us,” Jahangiri says. “We are centralized when our
competitors chose a more shotgun approach, we invested
more than anyone else in the brand, our team has experience and a lot of tough lessons behind them. We are very
cognizant of the fact that we are the largest right now, but
we still have the mindset of an underdog.”
Precocious entrepeneur
TJ Jahangiri came from a modest military Iranian family
and Azi Shashani was raised upper-class, distantly related
to the family of the Shah via cousins and marriages. They
married when he was 17 and she was 15 and her family
disowned her for marrying outside of her standing. But
TJ, a scrappy entrepreneur, was still able to build a substantial business in Tehran on government construction
contracts. When the Iranian Revolution struck in January
of 1979, and the Shah and the Pahlavi dynasty were run
out of the country and rule fell in the hands of the Ayatollah Ruhollah Khomeini, TJ fled with his wife and two
AAG staff enjoys the chili cook-off.
sons, his mother and her sister to the south of France, leaving all his assets behind. The younger son, Reza, was three
months old at the time. After six months, the exiled family
came to the Washington, DC area and lived for two years in
Bethesda before relocating to Orange County, California.
In the 1980s, TJ reestablished a construction business that
was hit hard when Iraq invaded Kuwait, oil prices soared
and the stock market crashed in 1991.
“My father had a heavy entrepreneurial spirit that he
passed down to my brother, my sister and me. He believed
you never give up,” Jahangiri says. “But his knowledge
from Iran never translated into the American mindset.”
By the 1990s, TJ had entered the cardiac imaging business. In 2000, he, his oldest son and 21 year old Reza,
just graduated from UC Irvine and attending Loyola Law
School, formed HeartSavers, a business that set up cardiac
imaging facilities and included a relationship with Johns
Hopkins Hospital.
“My dad and I tried to work together for years,” Jahangiri
says, “but we had different mindsets. He was very transactional and I was long-term, cash-flow sensitive.”
To protect his future he and his father parted ways
professionally, Reza set up a separate company, Imaging
Venture Group, which bought distressed assets from banks
and resold them to hospitals.
On a first date in 2004, the woman Jahangiri invited
out ran the reverse mortgage department at a local bank
and, over dinner, he became instantly fascinated with the
idea of the product.
“I loved that it was obscure and so misunderstood. I
saw a gap between the facts and perception. And it was not
part of the credit bubble. I saw an opportunity to create a
business that provided seniors with a solution to a looming
social issue,” he says.
The relationship didn’t sustain itself, but Jahangiri’s fascination with reverse mortgages did. So as a side business, he set
up a brokerage office, got licensed in California and worked
with Financial Freedom as a lender where Kimberly Kerrigan
was his account executive, and sold loans largely utilizing a
direct mail approach. (Little did he know at the time, but
Kerrigan would join him later to grow his business.) By 2007,
Jahangiri left the health care space behind and moved into
reverse mortgages full-time. He first brought in Austen Verst
to run sales and marketing. Verst, now EVP of production,
brought a methodical approach to building businesses to
scale. Together, the duo moved into a 4,000 square foot space.
By 2008, they had a staff of 25, were growing and leased a
10,000 square foot space. But the timing was inopportune,
and within a year, the recession hit.
“The senior mindset changed,” Jahangiri says. “They
lost confidence in home values and no longer trusted loan
products. It was a tough time.”
In addition, in September of 2008, AAG found itself
faced with a reputational crisis: at its current staff size, the
company depended upon third-party vendors for certain
tasks, including marketing materials. Among them was a
direct mail piece that characterized reverse mortgages as a
product of President Obama’s stimulus plan. It implied the
program was a government provided benefit. The Massachusetts Division of Banks accused AAG of “deceptive
marketing” and ordered them to stop selling via false
or misleading direct mail. Early in 2010, Massachusetts
banned AAG from doing business in Massachusetts for
two years. The same piece instigated run-ins in several
other states that required negotiated fines and settlements.
A turning point
“Fear was running through my blood. We realized we
needed to be more in control of our marketing and remain
conservative. We wondered, should we get smaller and be
able to ride this out? Or, do we raise capital and scale while
everyone is going the other way, become a bank, grow? We
chose the latter. And we were fortunate to find an equity
partner in Jacobs Asset Management (JAM) in 2009 that
had a depth of experience in the space and appreciated
what we had put together.”
JAM had previously made a successful investment in
David Peskin’s Senior Lending Network and within 13
months sold at a profit to the Belgium-based KBC Bank.
An avid collector of ideas, eager listener and skilled summarizer of what he hears, Jahangiri sought advice on building
his company from other successful mortgage bankers.
When Senior Lending folded shop, Michael Sekits of
JAM suggested Jahangiri might benefit from surrounding
himself with people with deeper experience in the lending
space and take advantage of the availability of some of their
key staff. So Jahangiri recruited Chris Mullins to run operations, Paul Fiore to run sales and Teague McGrath to run
a new in-house marketing department, requiring Fiore and
McGrath to relocate from Long Island to Orange County.
“The decision to join AAG was not easy,” said Fiore. “I
was moving my family 3000 miles. But we shared a singular focus of what we wanted to accomplish and what the
message was going to be. After the crash, there was a lot
of skepticism in the public. What was tried and true didn’t
work anymore. People were not thrilled with the government. Government-insured, non-recourse loan fell on deaf
ears. So we pulled away from that conversation. Our focus
was on reverse mortgages as a retirement and longevity
tool, not needs vs. wants. We asked, ‘what is your situation
and how can we improve it?’ We wanted to centralize and
devote our resources to messaging and training.”
Along with Jahangiri and Verst, the three newcomers
became a part of the core team that spent large segments
of most days in a room together.
“Reza set the corporate culture,” Fiore says, “which was
‘let’s not react to tomorrow’s news. Let’s not be jumpers.
Let’s stay here 10 to 20 years.’
“When you’re smaller, you don’t silo,” Jahangiri says.
“There’s a lot of crossover. If there’s an issue from HR to
underwriting to technology, sales conversations, we’d get
in a room to brainstorm and troubleshoot.”
Nine months after JAM closed on their investment in
AAG, the reverse mortgage lender had run through all the
cash. The market was shrinking, projections were not what
were planned.
McGrath, a television producer who had emigrated
from Australia, had been brought in by Senior Lending
to work on the positioning of their television commercials
featuring Robert Wagner. He came away from that experience sold on the celebrity spokesperson as an approach
to building a brand. So he made the rounds of Hollywood
agents for AAG trying to persuade them that hawking
reverse mortgages would not be a career destroyer and he
14 R E V E R S E
settled on Peter Graves, one time star of the 1950s series
Fury but best known for his role on Mission:Impossible, as
the face of AAG. But within six months of filming his first
spot, Graves died.
It was another pivotal moment for Jahangiri and his
team. The company had but one percent of a shrinking
market in the wake of a recession and they were selling
leads to produce cash flow.
“But we believed in our approach and in ourselves,”
Jahangiri says. “We kept iterating on the sales process,
iterating on the marketing approach.”
“I brought in a lot of sales training,” Fiore says. “I listened in on calls in our call center. I asked everyone, ‘what
did you hear from your client?’
“I had to adjust to the difference in sales approaches
between New York and California. In New York, the salespeople are very direct. You have to teach them to be more
emotional, a little bit softer.
“In California, you have to teach them how to have
a conversation that leads to a specific sale instead of just
being nice to somebody. In that first year, we had a lot of
nice conversations, but we didn’t get a lot of business.
“But an advantage of a call center model is that when
someone says something that is incorrect, you can fix it
right away. With face-to-face sales, you convert conversations to loans at a higher rate. But a call center is a better
volume opportunity.
“We also found that people who called responding to
a television commercial are warmer and more welcoming
than those who just fill out forms online.”
Putting a Face on the Brand
While Fiore improved sales, McGrath did the rounds
at the Hollywood agencies yet again, searching for a new
spokesperson. After considering a long list of candidates,
including astronaut Buzz Aldrin and singer Kenny Rogers,
McGrath determined the best candidate to provide the
company with credibility was former senator and actor
Fred Thompson. (Note: See accompanying story on p. 18).
McGrath conducted exhaustive consumer research to
confirm his choice, including visiting senior centers, armed
with episodes of “Law & Order” in which Thompson portrayed District Attorney Arnie Branch for six seasons.
There were initial concerns that Thompson, who had
made a brief run for the Republican nomination for Pres
ident in 2008, would be perceived as too partisan. But
the research persuaded McGrath that Fred’s acting career
balanced that out. Despite the results of the research,
Jahangiri told McGrath he would never convince Thompson
to accept the role and put a trip to Las Vegas on the table
as a prize if McGrath could pull it off.
McGrath won the prize. Thompson signed on in 2010.
Through May of that year, AAG was surviving on a bridge
loan and lead sales. But in June, everything started to change.
“At that point, we were living and dying by every commercial,” McGrath says. “We were very careful with our media
buying, continually searching for the best rates. Back then, we
could only spend per month what we now spend per day.”
“We found the combination of the right marketing
approach and the right spokesperson,” Jahangiri says. “We
turned to a very multi-educational, thorough sales process.
We kept a hypersensitive eye on systems, process, metrics
and analytics in connection with the sales force. We were
able to pinpoint the right sales formula that achieves the
greatest results, and to have the right mix of what generates business, with the right cost per fund.”
Generally independent of spirit and so competitive by
nature you can see it immediately on the golf course or
even at the ping pong table, Jahangiri was an outlier from
industry collaboration at this point, operating in a silo and
more concerned with proving his company’s validity.
In 2011, AAG broke into the industry’s top ten lender
list at ninth place with 1,815 loans endorsed. All of these
loans were direct-to-consumer, retail transactions. And, in
fact, looking exclusively at retail, AAG had the fourth largest
volume. But of the eight companies above AAG on the
list, seven also dealt in third-party, wholesale loans.
“I’ve never admitted this to anyone, but it was a mental challenge for me as we considered entering into the
third-party channel,” Jahangiri says. “With wholesale, you
just don’t have that same level of control and sensitivity
that’s on your sales floor.”
During this time, Jahangiri contacted Kimberly Smith
(now Kerrigan) who, as you may recall, had been his
account executive for both Financial Freedom and One
Reverse when AAG was a broker.
“It was not surprising that wholesale would give Reza
pause,” says Smith. “With a central call center, the company
model ensured tremendous control of the process. But I explained to Reza that a successful wholesale business required
a very thorough vetting process, building relationships so
you know who the clients are. And even then, you still won’t
be right 100% of the time. There are going to be risks.”
“Kim really helped me become comfortable with the
process,” Jahangiri says.
In 2012, growth of AAG surged. Retail endorsements
were on a pace that would more than double the previous
year’s record volume. But rather than just be giddy about
his success, Jahangiri realized this would require adjustments. Among them, he acknowledged that he needed
to be more involved in the industry conversation and the
public policy process and became more actively involved
with the other lenders at NRMLA. (Jahangiri’s commitment to the organization and the industry has earned him
the current co-chairmanship of NRMLA, a position he
shares with Joe DeMarkey of Reverse Mortgage Funding.)
“This was another pivotal point,” Jahangiri says. “We
could’ve kept going without adding partners. But I knew
as we were accepted for Ginnie Mae issuance we were
going to need a balance sheet. I knew we were going
through an era of further FHA policy changes.”
In July of that year, Jahangiri began negotiations with
the private equity firm of Friedman, Fleischer and Lowe. FFL
committed “a couple of hundred million of equity facility
for us to draw down upon if needed,” Jahangiri says.
Just 30 days before the deal was to close, HUD released
the actuarial report that showed the HECM book of business was not doing well and a draw on Treasury was required
to support the Mutual Mortgage Insurance (MMI) Fund.
“I remember saying, ‘we’re doing really well right now.
We’re setting record numbers in growth,’” Jahangiri says.
“But I knew things were going to get choppy. We were
starting to head into Congressional hearing season with an
MMI fund with issues. And we were fortunate we found a
real team-oriented capital partner in FFL that had experience in capitalizing growing businesses like ours.”
Scaling for Growth
By the end of 2012, AAG had dipped its toe into the
wholesale waters, attracted Smith to come on board to run
that division and rose to seventh on the top ten list. As
Smith developed her team, wholesale would grow to 15
percent of total volume in 2013 and over 25 percent of
volume when AAG became the top lender in 2014.
“Our team built a process that Reza could walk through
and understand,” Smith says. “We mitigated risk by being
very aggressive with online training and live events and
requiring that brokers all submit their marketing materials
to be reviewed by our attorneys. We have terminated people
who were not compliant. It’s been fun to watch Reza get
acclimated to this. But he still can get frustrated that you
can’t control everyone’s behavior.”
“I’ve grown to love that channel,” Jahangiri says. “It
raises your level of customer service. They are all very competitive so we have to be customer-centric.”
With the new financial foundation, the size of the
AAG executive team was able to double. The FFL staff,
which had guided the growth of other businesses, encouraged Jahangiri to reach outside the box and bring in people
with experience in scaling other businesses.
“In my position, you need to have the ability to spot
talent and be honest with yourself about areas of weakness
within the organization,” Jahangiri says. “You hit times in
the company when you need to raise the business to different tiers of scale. And you need to bring in people who
have seen the next three, four or five steps in scale to help
you build accordingly.”
The five man executive team that had shepherded the
company until now was expanded to include Lenoir from
the Dish Network in digital marketing; Matt Engle, previously executive vice president of finance for the real estate
financing firm Newmark Grubb Knight Frank as Chief
Financial Officer; and Sean Bobbitt, who had vast experience in larger mortgage companies, as Executive Vice
President of Operations.
Recently, Chris Mullins became the first of the original
team to depart.
“I first interviewed with AAG in 2009,” Bobbitt says.
“Reza told me then he was totally dedicated to the cause of
reverse mortgages. From that time until 2013, there was a
lot of money to be had, a lot of distressed assets in the forReza Jahangiri continued on page 17
16 R E V E R S E
ward mortgage space. But like Reza promised, they stayed
committed to this space. That really impressed me. And so
I came on board.”
“We’ve been evolving,” Jahangiri says. In May of 2014,
we added our national field sales channel, which consists
of approximately 100 retail LOs—our feet on the street.
We’ve added leadership, revenue streams, became a substantial servicer and a Ginnie Mae issuer. Yet, I believe that
our core centralized, direct-to-consumer business supported by our well-known brand has insulated us from some of
the third-party dynamics that would affect us if we were,
say, 80 percent wholesale.
“At times, when other companies backed off in marketing and growth due to policy changes, we kept going.
You have to be disciplined in your business model. Just
because the market is moving around, doesn’t mean you
should. At times, if the pricing doesn’t make sense to us,
we’re not going to follow just to play in the market.
“We have confidence in the long-term sustainability of
the product, and, regardless of what the issue of the moment is, this product will continue to help seniors navigate
the retirement crisis with a solid solution.”
Audacity and Reality
Reza Jahangiri is a complex mix of calm, incisiveness,
openness, fun and audacity. At his wedding at the Beverly
Hills Hotel in 2013, he played guitar before a band and
backup singers and sang a song called “Dumbfounded” he
had written to his new wife. This may not sound that audacious until you consider the fact that the wife he sang to is
Kate Levering, a Tony-nominated musical theater actress
for her performance in the 2001 revival of “42nd Street”
on Broadway. She also did a six-year stint playing a lawyer
in the Lifetime television series “Drop Dead Diva.” In between the birth of their first son, Holden and with a second
due in September, Kate starred in a new production of the
Broadway classic “A Chorus Line” in Sacramento.
They recently moved into a new home they built in
Newport Beach along the canals where Jahangiri maintains his boat. He’s a good athlete, a musician, has great
interest in politics, the performing arts, books and has
been known to party. It all sounds pretty good, right? But
he’s still kept awake at night concerned about the inherent
problems of growth, the parts of the business he has no
control over, the status of the MMI fund and the regula
Reza weds Kate Levering, Broadway and television actress.
tory sensitive environment. He’s now investing a lot of his
time in studying risk management.
“I think a weakness of mine that I’m working on now is
understanding the portfolio management risk, the servicing
book risk,” he says. “Servicing, especially in today’s environment, is highly scrutinized. And we have a very young
book. As it seasons, we have to be cognizant of potential
issues. So I’m bringing in talented people to monitor our
portfolio, make the right moves, understand how those
moves impact pricing and reserve capital for our servicing
book. This is not an area of my core competency.”
His office in the middle of a hallway of executives on
a middle floor of the company’s headquarters is no larger
nor more elegant than those of his teammates. Aside from
family photos, the one distinguishing diversion is the guitar
resting on a rack.
“I’m cognizant that I report to a higher power now and
have to live up to the board’s expectations,” he says.”I have
a responsibility to our shareholders. If I find myself in over
my head, I have to come to terms with that and start succession planning to get someone in place with more scale
experience over me. If I keep growing with the business,
I keep my seat. I think of that every day when I come to
work. I don’t think that just because I founded the business, I have a right to remain here. Right now, I’m less
important than the legacy of the business, what it can do
for both seniors and our employees.
“I want to turn this company into an even more significant brand that solves issues seniors are facing from
financial needs to senior care. In five years, I want us to
be offering more products that solve the significant issues
seniors are facing.” RM
Fred Thompson
Celebrity Colleague
IN A SOCIETY OBSESSED WITH CELEBRITY WORSHIP,
no one seems to complain when a star is hawking a movie,
a television series or a book via commercials or the talk
show circuit. It’s expected. But for some reason, there is
frequent criticism when a star represents a product. People
tend to be suspect of the credibility. It’s okay for the star to
promote the latest end-of-the-world disaster film, but not
a save-the-world health or financial solution.
Which brings us to Fred Thompson, former Senator,
actor, and now the spokesperson for AAG and, to many, the
face of reverse mortgages. Marketing directors for companies, other than AAG, have acknowledged that Thompson’s
widespread presence on television has helped every company.
Despite occasional razzing (usually in opening paragraphs) from reporters looking for a familiar name to
give a reader reason to continue on, Thompson is unlike
any other spokesperson I have known in his devotion to
the product and his participation in the company he represents. I’m sure he’s being paid well, and he refuses to
blow his own horn, but it was recognition of the product’s
value and respect for those he was invited to work with
that encouraged him to select this particular assignment
from a number that were offered at the time.
Fred Thompson has always been a man with his own
strong ideas and convictions. As a prosecutor in the Watergate investigation and a Republican, he nevertheless had
the audacity to attempt to indict Richard Nixon. Despite
his conservative credentials, he is a member of both SAG
and Actors Equity, the performing arts primary unions.
“I fancied myself as independent my whole career,” the
former Senator from Tennessee says. “There certainly were
times in Congress when the vote was 99-1 and I was the
lone dissenter, usually for feel good, meaningless pieces of
legislation.” Thompson has a history of making choices
based on values rather than convenience.
“I don’t want to toot my own morality,” Thompson
says. “This was a business decision, sure, but I don’t make
any decisions without investigating and making sure it fits
in with what I believe in.”
Before he agreed to sign on with AAG, he put Teague
McGrath, the company’s Chief Marketing Officer,
through the ringer. McGrath had done his research and
knew he had to have Fred Thompson for the job. “I did
18 R E V E R S E
extensive research with groups of seniors,” McGrath says.
“I went in equipped with episodes of ‘Law & Order,’ then
asked, Would you trust him? Would you have him over
for dinner? Would you show him your bank balance?” The
response was overwhelmingly positive.
“But we had to convince him it was the right thing to
do,” McGrath says. “It was a long drawn out process. He
wanted to make sure we were doing the right thing. He
poked holes in our arguments. He attended a NRMLA
meeting and sat in the back to get a feel for the industry.
When he was on the fence, I rounded up a bunch of satisfied borrowers and planned to scatter them throughout
LAX when I knew the Senator was arriving and have them
stop him and tell him what good experiences they had.
But he signed on before I pulled it off.”
“I spoke with a lot of consumers on the phone,” Thompson says. “They’re just solid folks. We aren’t dealing with
people who can’t function. But it was important for many of
Fred Thompson
continued on page 19
Fred Thompson continued from page 18
them to have people to consult with about retirement. And
that was a great benefit here, the requirement for consultation with a counselor, as was Reza being one of the most
conscientious entrepreneurs I ever encountered.”
“The more I’ve learned, the more I’ve been impressed
with the product and the industry,” he continues. “This is
an industry that has had continuous reform and addressed
things that may not have originally been seen as issues.
As we’ve learned from experience, the industry has been
responsive to the needs of the consumers. So this has been
a very satisfying experience.
“We have a special responsibility because we’re dealing
with seniors…but most of them are younger than I am now.”
After seeing one of his early commercials, Thompson’s
mother Ruth called him and said she was interested in
getting a reverse mortgage on her simple, two-bedroom
house in Franklin, Tennessee, a suburb of Nashville. “She
was one of those people who wanted to feel she was as
independent as can be,” Thompson says. “I took responsibility for whatever she wanted or needed, but by using
her own equity, she felt she was contributing in her own
way, and she felt better about herself.”
Now in the sixth year of their relationship, AAG CEO
Jahangiri considers Thompson a colleague and a mentor.
Among other issues, Jahangiri seeks consultation from
Thompson when dealing with government policy issues.
“That’s the nicest thing anybody can say about me,”
Thompson says. “Growing this company has been a collaborative effort. There has been continual change and
reform and we share the view that we keep moving into a
better and safer environment for the consumer.”
“It was not a bunch of businessmen who got together
and conceived a new business,” Thompson says. “This is
a regulated industry that was spawned by the government
as a protection for a whole lot of people. In that spirit, we
encourage people to check it out. And that’s just the beginning of an extensive process that includes consultation
and close government oversight.” RM
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20 R E V E R S E
THE BUSINESS OF COUNSELING
Sustaining Counseling
Great idea, valuable service, but underfunded
“Counseling Requirement for Home Equity Conversion Mortgage (HECM) Borrowers. Section 255(d)
of the National Housing Act and the implementing
FHA regulations at 24 CFR § 206.41 state that all
prospective HECM borrowers must receive reverse
mortgage counseling prior to obtaining a HECM.
This counseling must be received from eligible counselors working for participating agencies approved to
provide this statutorily required counseling.
“To meet the statutory requirements for obtaining
a HECM, the prospective borrower must receive oneon-one reverse mortgage counseling and be issued a
HECM counseling certificate. Counselors are allowed
to provide the required reverse mortgage counseling to
a group of related family members if they are documented on the deed together.”
—HUD Handbook: Home Equity Conversion Mortgages
COUNSELING IS AN INTEGRAL COMPONENT OF THE
HECM process, which is a complicated financial product
involving the largest asset most borrowers possess. Those
eligible for the program are all seniors, and many of them
have not taken part in a business-type decision for a long
time. Some suffer infirmities that make comprehension
more difficult or time consuming. So few in the industry
disagree with the requirement.
But in practice, is HECM counseling a viable and sustainable business model? Our informal survey of the industry
presents a decidedly mixed bag.
Certainly the most principled and high-minded aspect
of the program is the procedural firewall between counselors and lenders that assures counseling remains completely
independent and unbiased. Lenders must provide a list of
13 available counselors (8 national intermediaries and 5
local agencies) but cannot steer a client to any one in particular. And counselor fees are not dependent on whether
By Mark Olshaker
or not a reverse mortgage closes.
In practice, this means that lenders may not hire the
counselors or pay for their services. So payment has to come
from elsewhere: either the client or a grant. And with the
recently implemented Financial Assessment requirements,
even HUD acknowledges that counseling sessions will be
longer and more detailed.
On April 14, HUD awarded $36,293,245 in housing
counseling grants to hundreds of national, regional and
local organizations, which it stated would assist more than
1.5 million households. While there were several large
grants to intermediary organizations – the most substantial
was $2,634,743 to Neighborhood Reinvestment Corporation in the District of Columbia and the next highest to
Homeownership Preservation Foundation in Minneapolis
– these were for all counseling services, not just HECM
loans, and most grants ranged from about $11,000 to
$14,000. There is widespread agreement throughout the
industry that these funds are insufficient.
According to one observer: “As the cost of counseling increases, the HUD funding falls farther and farther behind.”
There are a number of basic factors that impact the
business of counseling. First, like a hospital emergency
room, a counselor or counseling company may not turn
anyone away, regardless of ability to pay. If the client does
not have money for the fee, the counselor has two options:
Take money from a HUD grant if it is available, or have it
wrapped into the reverse mortgage loan, to be financed over
time. HUD does not allow a higher amount to be charged if
the fee is financed. And since the ratio of counseling sessions
to HECM closings is just over 50 percent, there is an almost
even chance the financed fee will never be paid.
“In theory, with Financial Assessment in place, there will
be fewer closings, so less funding coming in,” says Anthony
“Tony” Lopes, former Housing Director for Cambridge Credit
Counseling Corporation and one of the acknowledged
experts in the field. “And that can be very difficult to sustain.”
Sustaining Counseling continued on page 22
Sustaining Counseling continued from page 21
From his own experience, Lopes cites appointment
cancellations as another issue. “If a counselor schedules
four or five sessions a day and one or two are cancelled,
that can be a really big problem.”
This proves particularly true for individuals or smaller
agencies, which have to be able to justify financially training, testing, continuing education and retesting to meet
HUD requirements.
“To recoup recruiting, training, and testing, and all of the
other costs at $125 a session, there’s no big upside,” Lopes observes. “For a small company, it may not be worth the hassle.”
If there are an insufficient number of qualified counselors, the entire HECM process clogs and potential
borrowers are discouraged. Yet at some times, counselors
are insufficiently busy. There are fluctuations in volume
based on season, market rates and conditions, and HUD
program changes. Typically, when HUD issues a relevant
new Mortgagee Letter or amends rules or requirements,
Who’s Who in Counseling
loan and counseling volume shoot up in the months
preceding implementation, then dip in the months following, before ultimately leveling off again.
“It’s hard to predict your revenue,” Lopes comments. “I
can understand small groups not wanting to continue. We
are likely to see some of the smaller groups drop off.”
An even greater problem, he believes, does not apply
across the board but can be a major trial for counselors.
“Some lenders just push people into counseling without
ascertaining whether they’re appropriate candidates for reverse mortgages. They say, ‘Just tell them [the counselors]
that you want to finance the fee.’ Then these people contact
the counselor and say something like, ‘I don’t know why
I’m calling but the lender told me to.’”
“We have to make people understand that this is a great
program, but not for everyone,” states Claudia Fehribach,
Marketing Director of Debthelper Credit Card Management Services, Inc., a nonprofit housing and credit counseling organization.
The best business model, from Lopes’ experience, is to
have diverse business lines, even if some or all involve financial counseling. That is the case with Debthelper. Fehribach
agrees, “If an agency just relies on one service, it’s not very
wise.” And while she concedes that with Financial Assessment, “We had to adjust,” and the length of counseling
sessions rose, she says, “For us, it’s not bad at all. Reverse
mortgage is one of the services we provide, but our counselors provide many services. And after any HUD change,
new people come in to apply for HECM loans, and they
don’t know how it was before, so a new cycle starts. And
we believe that Financial Assessment was long overdue. It
protects seniors and we’re happy to implement it.”
Sue Brown, Vice President of Counseling at ClearPoint
Credit Counseling Services, echoes Fehribach’s observations.
“When a lender brings up Financial Assessment, some
people will opt out before counseling, so that actually cuts
down on the demand. With others who are new to the process, it sounds reasonable; more like a forward mortgage.
It makes sense to them: ‘Of course. It’s a loan, and they
come with responsibilities.’” All of the counselors contacted supported Financial Assessment.
As for those who go through counseling and then determine not to go forward, Brown says, “I maintain we’ve provided a great service to those who don’t qualify or choose not to.”
For either choice Fehribach notes, “We’re big on follow-up.
A couple of months after counseling, we will re-contact the
22 R E V E R S E
client to ask, ‘How did everything go? Did you close? Are
you happy?’” Results are reported back to HUD.
Fehribach has also been offering counseling by Skype.
“Many people can’t come in, but they like to see the face of
the counselor.” She believes Skype and other similar services
could take care of the concern in Massachusetts, which only
allows in-person sessions. Many say this has been a significant problem, since it is difficult for some seniors to travel
and there are few, if any, counselors available in the western
region of the state.
At ClearPoint, a multiservice company and HUD
intermediary, Sue Brown has 20 counselors on the HECM
roster. They provide telephone counseling throughout the
United States and face-to-face in nine states, including
Massachusetts and the two others that mandate it: North
Carolina and California. In the other states, about 15 percent of clients request face-to-face sessions. Like those at
Debthelper, all counselors are cross-trained since “The
amount of demand for HECM counseling changes
radically. One of the challenges is how to efficiently utilize
those counselors.” Though ClearPoint’s average session
has grown longer, Brown says it isn’t by much. “We’d already been doing a pretty substantial deep dive into financial evaluation before the new requirements.”
Still, she points out, if a lender hasn’t provided the
potential borrower with the full information packet prior
to counseling, then the counselor must provide it, which
represents even more time and work.
The current charge for HECM counseling ranges from
$125 to $150. HUD allows a slightly higher fee if it is
“reasonable and customary based on the level of service
provided,” but most agencies are responsibly wary of making the fee too high. Brown, for example, worries about
pricing any potential borrowers out of the market, given
the other expenses they know they will incur. Fehribach
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The Ongoing Evolution
of HECM Counseling
A Talk with HUD’s John Olmstead
IN THE WEEKS LEADING UP TO IMPLEMENTATION
of Financial Assessment on April 27, 2015, a major question
on people’s minds was the role of housing counselors in the
process. Some loan officers were concerned that counselors
could adversely impact a potential borrower’s eligibility to
get a reverse mortgage, before they were properly vetted.
In reality, the counselors themselves weren’t sure what
role they would play. John Olmstead, Housing Program
Specialist and a 28-year veteran of the U.S. Department
of the Housing and Urban Development, clarified the issue
when he addressed the industry at NRMLA’s Eastern and
Western Regional Conferences this spring. He also sat down
with Reverse Mortgage magazine to give us his thoughts on
financial assessment and other counseling trends.
Olmstead has worked in the Office of Housing Counseling
since its formation in 2012 and is one of a handful of people
at HUD to be listed on the HECM Counseling Roster.
“I want to make absolutely clear that counselors will not
be making financial assessment qualifying decisions,” said
Olmstead. “Those decisions will remain with lenders and
underwriters. We do, however, want counselors to discuss
the overall requirements of financial assessment, the types of
documents that lenders may require and why, and the impact
of full and partially funded life expectancy set-asides.”
The software used by counselors to estimate loan
amounts and closing costs has a new financial assessment
component that can help counselors identify potential issues
that borrowers may want to discuss in greater detail with
their lenders.
Olmstead suggests loan officers should refrain from
sending clients to HECM counselors if they know with a
degree of certainty that the person will not pass the financial assessment test.
“Instead of wasting the HECM counselor’s time and
having the borrower incur that expense, it might be more
useful to refer the person to a debt or credit counselor who
can resolve their financial problems,” said Olmstead. If the
By Darryl Hicks
person’s financial situation improves, then he or she can
reconsider a reverse mortgage as a possible option and
meet with a HECM counselor.
The wall that has historically existed between counselors
and lenders, which prevents one from influencing the other,
is also being reconsidered.
“The Office of Housing Counseling is revising the
HECM counseling protocol by creating avenues where
some communication can take place,” said Olmstead.
HUD has no timetable yet when these policy changes will
be published, but in the meantime, “we continue to emphasize the importance of counselors acting in the best interests
of consumers and remaining independent of the lenders.”
Another aspect of the counseling process that has been
slowly evolving is the delivery method. While the vast majority of people are still counseled over the phone, virtual
technologies, such as Skype, are being used with greater
frequency.
“We have no prohibitions on the use of virtual technologies, as long as both parties are amenable to its use and
the technology provides secure voice and video contact
with the client,” said Olmstead. “It’s as much the client’s
choice as it is the counselor’s.”
While speaking at the Western Regional Meeting,
Olmstead displayed a slide which showed that in fiscal
year 2014, counselors issued 83,859 certificates, while
actual HECM endorsements totaled 48,024 loans. He
said it’s too early to know how financial assessment will
impact these numbers going forward, but he hopes that
people who should never have gone through counseling
in the first place are identified sooner in the education
process.
“From HUD’s point of view, a successful counseling
session is determined more by a client’s ability to make an
informed decision based on their personal circumstances,”
said Olmstead. “Many lenders have said they will screen
their clients for potential financial assessment qualificaEvolution of HECM Counseling continued on page 27
24 R E V E R S E
A Day in the Life of A Counselor
By Jessica Hoefer
7:00am: On an average Tuesday in May, Dan Grafius
arrives at ClearPoint Financial Solutions around 7:00am
where he has worked for nearly 18 years offering credit,
reverse mortgage, and loss mitigation counseling. On the
agenda for the day are the usual three sessions. Grafius
will spend the day counseling an elderly couple, the
Marshalls, Mr. Stein and his daughter Sarah, and a widow,
Mrs. Brown on reverse mortgages. To prepare for the day
ahead Grafius scrutinizes his businesslike office to assure that
everything is in place, checks to see that the counseling
paperwork is organized, and adjusts one of the five landscape
photos he took in Hawaii, adding a personal touch to the
sunny third floor office overlooking a parking lot in
Granada Hills, California.
7:00-7:30: Grafius spends his first 30 minutes of the
morning answering emails. On average the emails are questions from other HECM counselors about Financial Assessment or quality assurance. He also gets a number of requests
from loan officers regarding corrections to certificates.
7:30-9:30: At 7:30am Grafius’ first session of the day is
an elderly couple, a 78 year-old woman and her 80 yearold husband. Right off, Grafius can tell that Mrs. Marshall
has deep reservations about obtaining a reverse mortgage,
while Mr. Marshall is more optimistic. The couple’s major
concern is whether or not they will have any equity left for
their heirs. Grafius spends much of the two hours emphasizing the rising debt, falling equity nature of these loans
and the amortization schedule showing them how the loan
balance increases dramatically with the compound interest at play. He explains that “if they are hoping to have
equity leftover there is no guarantee and it’s dependent
on a number of factors; how much the home appreciates
in value, if they select an adjustable rate, what the interest rates do, how long they have the loan for, and most
importantly how they use the loan.” Towards the end
of the session Grafius’ instincts tell him Mrs. Marshall’s
inclinations may have won out and that the couple won’t
follow the reverse mortgage route. Either way, Grafius’ goal
is merely to ensure that the Marshall’s understand all of
their options regarding a reverse mortgage. So, per HUD
requirements, Grafius makes sure they understand their
other options; such as refinancing their existing mortgage,
a debt management plan to consolidate, and home-sharing.
The remaining 30 minutes, usually set aside for post-counseling paperwork, is spent answering more questions and
addressing concerns.
9:30-11:30: At 9:30am the second session of the day
commences with an 80 year-old, Mr. Stein, who is accompanied by his, financially savvy daughter, Sarah. Mr. Stein’s
frail appearance makes him look childlike sitting in the
black faux leather chairs with wooden armrests, while
Sarah appears to be the parent, a semblance that Grafius
is all too familiar with. Like so many other scenarios that
A Day in the Life continued on page 26
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A Day in the Life continued from page 25
play out just like this Grafius starts off by explaining that
while it is beneficial to have Sarah present for assistance,
Mr. Stein will be responsible for answering the 10 comprehension questions himself. Grafius keeps Mr. Stein as
engaged as possible, but on several occasions Sarah tries to
answer for her father, insistent that “financially a reverse
mortgage is his best option.” Grafius reminds Sarah of
HUD’s requirement that the client demonstrate a clear
understanding of the reverse mortgage material. Knowing
the daughter’s stance Grafius is diligent in making sure that
Mr. Stein is fully aware of all of his options. In this particular instance Grafius is successful. “Mr. Stein left the two
hour session with a clear understanding of his options.”
45-day follow-up call to a prior counseling client, and return
a client call requesting clarification on a topic previously covered in the counseling session.
11:30am-12:00pm: With each counseling session lasting
close to two hours Grafius has a brief 30 minute window to
answer an email from another counselor requesting any information on Financial Assessment that he can provide, make a
2:00-4:00: Grafius’ final session of the day is at 2:00pm
with a widow considering a reverse mortgage after the death
of her husband. Mrs. Brown has a mortgage payment, her
income has been reduced, she isn’t covered by her deceased
husband’s pension, and she is worried about being able to
stay in her home. Grafius’ patient disposition ensures he
takes his time explaining reverse mortgages and helping
Mrs. Brown determine whether or not it is a sustainable
solution. Grafius posits some emergency scenarios and has
Mrs. Brown consider how she would respond. Then Grafius
has Mrs. Brown look at how a reverse mortgage would fit
in with her current financial situation. Having his clients
know every possibility is important to him. Grafius explains to Mrs. Brown that his only concern is that “at the
end of the two hours you are able to form your own opinion
regarding a reverse mortgage.”
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26 R E V E R S E
12:00-1:00: From noon to 1:00pm Grafius squeezes in
lunch at his desk. Today it is a sandwich with a side of chips.
1:00-2:00: The hour between 1:00pm and 2:00pm is
spent creating and sending out pre-counseling paperwork.
Once he receives an email stating that an appointment
has been scheduled, Grafius compiles the paperwork and
sends it to the client, allowing a chance for them to review
the material before their counseling session.
4:00: 4:00pm is the end of Grafius’ hectic day. In the
span of eight hours he has counseled an elderly couple on
opposing sides of a reverse mortgage, successfully apprised
an 80 year-old man of his options despite his daughter’s
constant intrusion into her father’s affairs, and facilitated
a widows understanding of whether or not a reverse mortgage is a sustainable solution for her. Whether or not any
of these clients choose to go with a reverse mortgage is of
no consequence to Grafius. He evades any conversation
that requires him to express an opinion on whether or not
the client should proceed with a reverse mortgage. Grafius
simply “states the facts, provides options, and ensures that
each client understands the same basic information covered in the counseling session.” RM
Evolution of HECM Counseling continued from page 24
would like to see the standard charge rise to $175 but no
higher. “That, or bigger grants would make everyone happy.”
No one wants to see counseling curtailed, but the current financial realities are difficult to ignore. “We get some
grants from corporations and we all rely pretty heavily
on our HUD grants. But at the end of the day, it’s not
enough,” says Brown. “A hundred and fifty dollars doesn’t
quite cover the cost of counseling. We are fully committed
to this process and providing these services to consumers,
but at some point, we will probably have to limit our capacity. As it is, it’s difficult to work out budgets and staffing each year.”
A number of proposals have been made to sustain
HECM counseling and even out the service-compensation
equation. One proposal would have lenders put the equivalent of the fee into an escrow account for each potential
borrower they send to counseling. The escrow would be
administered by HUD, thereby maintaining the firewall,
and would be distributed to the counseling agencies according to volume.
A similar idea, outlined by Lopes, would reflect only
those cases that actually went to closing. Based on the
50-plus percent completion rate, a sum of approximately
twice the current fee – say, $250 – would be paid into a
pool administered by a neutral third party, such as HUD,
and remitted to the counseling service. The money could
be charged to the loan originator or split with the borrower
at settlement or through financing.
“I think the pool idea is a model that might work,”
states Brown.
But,” for that to happen,” Lopes concedes, “HUD
would have to rearrange a lot.”
The best scenario, he says, would be to see the volume
of loan originations rise. “If we could get back to 2009
levels, meaning about 200,000 sessions for a little over
100,000 loans, you would see a lot more people jumping
back in. That would warrant and sustain training and taking on new people.”
One way or another, it seems clear that for this fundamental part of the HECM process to work properly and
smoothly, a stable and predictable funding mechanism
is essential.
“Without a doubt,” says Tony Lopes, “more money
would mean more counselors.” RM
tion issues, which goes back to my earlier remark that we
encourage lenders to promote debt and credit counseling
to those particular clients versus HECM counseling.”
Three months into financial assessment, Olmstead
hasn’t received much feedback from counselors, but he
noted that, “counselors have asked us to consider some
clarifications around the depth of information that they
are expected to go into with consumers. HUD is working
on a housing notice that addresses some of these concerns. I think we’ll have a better idea soon what types of
questions consumers are asking counselors and that might
direct us in developing further refinements to the counseling process.”
NRMLA, said Olmstead, will be invited to participate
in any discussions that take place to refine and improve
HECM counseling. RM
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Welcome LESA
Some Borrowers’ Best Friend
By Paul Fiore
WHEN THE TIME CAME FOR FINANCIAL ASSESSMENT,
it was clear that this was likely the most impactful change
our industry had ever seen. Along with credit and income
guidance, it ushered in the advent of a new word in reverse
mortgage lingo, the dreaded LESA.
The LESA, or life expectancy set aside, is something
that many of us, including myself, feared upon introduction. After all, a set aside that is going to take away from
the proceeds of the loan, to pay property charges, including
taxes and insurance for the life expectancy of the borrower,
is likely to be a significant amount of money, resulting in
few if any proceeds remaining. Why would a borrower say
yes to having nearly all of their proceeds put aside instead
of having the proceeds available to do what they wanted
to do? For years we have sold this loan showing the line of
credit and the growth rate associated with it, how are we
to sell this?
As I spoke to many of my colleagues in the industry,
there was a growing consensus, the LESA was only for the
borrower in a situation where they had little to no choice.
The belief was that most people will say no to such a
restrictive use of the proceeds unless they were borderline
28 R E V E R S E
foreclosure and wanted to save their home. We all started
trying to figure out what the impact of the LESA would
be, how much business would we lose as an industry? The
LESA mindset was extremely negative. What now?
As is the case with change, we often fear what we don’t
know. Instead of looking at LESA as a last resort option
for seniors and a negative outcome for our client base,
we need to take a breath and try to understand the why
behind the LESA. What positive outcomes can occur for a
borrower when being put into a LESA? Are we really only
serving those clients that are losing their homes otherwise
or is there another group of borrowers that would benefit
from the LESA?
Once you start to examine the function of the set aside
and actually see how it works, you can begin to see the
value in it. Once you change your mindset and start to
embrace the LESA, you can actually see where this can
potentially help a borrower get on the right financial path
for their future. The turning point for me was when we started to
prepare our sales team for FA. Two months before FA went
Welcome LESA continued on page 29
Welcome LESA continued from page 28
was, we needed to figure out how it would be explained to
the potential client.
Ultimately, when you sell any product, your attitude
towards the product goes a long way into how well it is
received from your potential client. If you don’t see the value
in what you are selling, you likely won’t sell it successfully.
Now that we saw the benefit of the LESA, our sales team
would go in with the right mindset and sell it with conviction, which was the first step. The next step was explaining
it to the client. We determined that the best explanation
for the LESA was this: it is an opportunity to remove all of
your housing obligations, free up monthly cash and help
you start to clean up some of the credit issues that you
had due to not having the cash flow necessary to pay your
into effect, we started to measure the borrowers pass/fail
rates on FA if it were to be in place. Essentially, we asked
our sales team to start asking the additional FA questions
necessary to determine whether a borrower would pass the
residual income part of FA. We started to see a consistent
pattern of roughly 90% to 92% of the clients passing the
residual income piece. Granted this was all based upon
verbal conversation and not actual income documents, but
it gave us a decent picture to see what our starting point
would be. The people who were failing the residual income
test, were typically borrowers who were highly leveraged
and had minimal equity in their homes. Many of these
clients were the people who would likely
not truly benefit from the long-term
Once you start to examine the function of the set
positive effect of a reverse mortgage
because they would still be cash
aside and actually see how it works, you can begin to
strapped. Even for these clients, a LESA
see the value in it.
would not likely help them since it
would likely leave them short to close.
bills. We are showing the clients that by having a LESA,
So if the LESA was not going to work for the 8% to 10%
they will have a way to start reducing their credit debt on
that failed the residual income piece, who would it work for?
a monthly basis and begin to repair their credit. They are
About two weeks before FA went into effect, we added
not losing the proceeds of the HECM to a set aside, they
the willingness portion to our test with the client base. We
are no longer paying obligations that they would have had
wanted to start to see the full picture of our borrowers and
to pay with those proceeds. The money is preserved in a
how many people who failed residual income would have
set aside for them. Many of our clients have had an escrow
good credit but more importantly, how many people who
account before, they just paid into it monthly, now they
passed residual income would fail the willingness portion
won’t have to since it’s already set aside for them.
of the FA and then require the LESA. Slowly, another pat The interesting part of this sales angle is how well
tern emerged: there was a group of borrowers who would pass
the client has taken to this approach. They welcome not
the residual income because the mortgage payment was not
having to pay their taxes and insurance any longer. They
counted against them, however, they were extremely tight
really get excited when they can see a path to getting out
financially and had some credit issues in the last couple of
from credit card debt and begin to repair their credit. They
years because they did not really have the cash flow to pay
see a way to financial security in their future. If there are
their rising debt. They were slow to pay their taxes and had
proceeds left over after doing a LESA, that’s almost like
some mortgage payment delinquencies. These clients were
hitting the lottery for these clients.
not unwilling to pay their obligations, they just were finan If you sell a LESA with conviction, with an illustrated
cially too strapped to do so. Perhaps a LESA would be the
path to financial security and with the right conviction
answer to their issues. After all, a reverse mortgage eliminated
and mindset, you will be amazed with how positive the
their mortgage payment freeing up a significant amount of
clients will respond. Don’t fear the LESA, welcome it. Putcash for them; by also covering their taxes and insurance
ting the right client in a LESA is truly the pathway for
for their life expectancy, they would truly not have any
a secure retirement for certain seniors and the more you
major housing obligations to have to worry about any
embrace that notion, the more people you will help. RM
longer. Now that we figured out who the LESA borrower
CRMP:
Across the
Kitchen Table
The Aloha Spirit
Originating in Hawaii
By Larry Lau
HAWAII LENDS ITSELF WELL, THERE IS NO PLACE
on earth quite like the Hawaiian Islands.
Here you’ll find palm-fringed blue lagoons, lush rainforests, hidden gardens, cascading waterfalls, wild rivers
running through a rugged canvas with active erupting
volcanoes spewing in the background. Year-round forecast
from our weathermen repeatedly predict a strong chance of
t-shirt weather. And oh, those postcard worthy beaches --
golden, black, and even green sands caressed by endless surf.
The possibilities for adventure and relaxation are endless.
Each of the Hawaiian Islands has its own personality and
its own sites that make Hawaii handsomely sophisticated.
And for countless reasons, it has been a highly sought after
piece of real estate.
In the eyes of Zillow, the median single family home value
in Honolulu is currently $626,300 with values appreciating
5.0% over the past year and Zillow predicts they will rise
another 4.2% within the next year. Many publications consistently dub Hawaii as a top ten “better performing state”
when comparing economic factors such as debt per capita,
median household income, unemployment rate, etc. If you
are a Kama’aina (resident) the 2013-2014 American Human
Development Report by the Social Science Research Council
revealed that you have the longest life expectancy in the US
with an average age of 81.3 years, which exceeds the national
age of 79 by 2.3 years. I’d venture to say that the Aloha spirit
which has been embodied into our culture has something to
do with that result.
The US Census Bureau tallies up 1.42 million total
residents, comprised of a figure just north of 250,000 late
middle aged (62+) residents and I have enough fingers to
count the number of reverse mortgage professionals serving
on a local level as a life passion. When looking at national
statistics towards the trends like ARM vs Fixed rate borrowers, needs based & affluent borrowers, etc. the percentages
seem to line up with my book of business. Currently, we are
one of nine states that the industry’s lonely jumbo proprietary product entertains. Life in the Islands is GOOD. But
wait: in a perfect world we wouldn’t look at the other side
of the coin.
That positively painted portrait, gives you a well-illustrated snapshot of why I chose Hawaii to market. But let’s
whiteboard out the challenges, starting with the financial woes
that our clients face from a local perspective. Cost of living
is expensive! Everything we consume is shipped in, almost
everything including fuel. Fuel that averages $3.16 per gallon as I write this piece. Three dollars and sixteen cents for
the local consumer compared to the national average of $2.67
means not only more money spent at the pump, it also means
the most expensive energy cost in the Nation. That cost is a
reality for everyone as we frown at our electric bill every
month. I can’t imagine the crisis that would take place if our
largest cargo, slow boat, shipping vendors, were to take part in
a strike or something of that nature.
Above the high energy cost is a matter much larger
for our late middle aged subjects. According to MetLife’s
Mature Market Institute Survey, Hawaii continues to be
one of the most expensive places in the US to age in place.
This includes but is not limited to homecare and healthcare, two checkbook heavy reasons why our late middle
age subjects inquire about a HECM. And for some strange
reason, is “common for the area with no adverse effect on
The Aloha Spirit continued on page 31
30 R E V E R S E
CRMP:
Across the
Kitchen Table
The Aloha Spirit continued from page 30
marketability” water catchments taste funny to most underwriters. On a side note, public perception is a national
event. We too, take part in changing the conversation and
scaling towards critical mass.
My best look is definitely not at 3:00 a.m. in the morning. That’s the time I need to be up and at it if I am working with an east coast fulfillment center as we currently
have a six hour time difference to respect. As dawn starts to
set in, it’s not always gorgeous weather as Hawaii is prone
to tropical storms and hurricanes. Doesn’t that mean
Hurricane Insurance! The same stuff the Gulf Coast has
become accustomed to. But we should be thankful insurance companies write wind policies because there are places
in Hawaii that insurance companies just won’t touch, not
even with someone else’s money. I’m talking about Lava
Zones. The Big Island, mind you the biggest and the best
Island, is comprised of 9 lava zones. With lava zone 9 designated as the safest area and lava zone 1 detailed as the
highest hazard. If you are a resident here in lava zone 1,
you have one choice of insurance provider, Lloyds of London,
and it isn’t the most affordable insurance premium I’ve
seen. And if you are a resident in lava zones 1 and 2, HUD
deems your property ineligible.
At the end of the day, the State of Hawaii has its pros
and cons just like any other State.
The most unique feature Hawaii presents is its Aloha
spirit. The Aloha spirit is a well-known reference to the
attitude of friendly acceptance for which the Hawaiian
Islands are so famous. In its modern context, Aloha is
commonly used to gesture greetings, farewell and expressing love. At its deepest core, it refers to a powerful way to
accomplish any goal, a way of life, and used to achieve any
state of mind that you desire. The stuff that keeps your feel
good endorphins swimming. Without a doubt, one of the
biggest reasons I choose to keep Hawaii the environment
to live, work and play. If you are reading this article and
happen to be one of the two million annual visitors, here
is an open invitation to reach out to me. With Aloha and
a glass half full of a well poured Mai Tai in my strong
hand, Cheers! RM
The superheroes at LRES provide a full range of valuation and REO Asset Management
services for the Reverse Mortgage Industry. They spring into action where others drag their
feet. And behind their cool demeanor burns the ﬁre of a real estate services superhero – highly
knowledgeable, accurate, and empowered to act on your behalf with extraordinary speed.
For an unassailable real estate services partner you can count on nationwide, contact one
of the superheroes from the LRES Team: 800.531.5737 or email sales@LRES.com
800.531.LRES (5737) ext. 157 ∆ www.LRES.com
Member
Profiles
Who’s Who in Reverse Mortgages
Member News
Liberty Names New President
Liberty Home Equity Solutions, Inc., a Top 5 reverse mortgage
lender, named Mike Kent as its new President in April.
Kent previously was President of the Mortgage Lending Division at Reverse Mortgage Solutions. In addition, he has 36 years
of “forward” mortgage experience, having held leadership roles
across various lending functions, including sales, operations and secondary markets.
“Mike is the perfect fit as President for Liberty,” said Otto Kumbar, CEO of Liberty, in a written statement. “He wants to grow the
industry and is passionate about helping more seniors. Mike’s extensive forward mortgage experience will help accelerate Liberty’s growth
and his entrepreneurial spirit and outstanding relationships in the
industry will create new opportunities for Liberty.”
RMS’ Chief Executive Retires
D. Scott Clarke, who took over as President and CEO of Reverse
Mortgage Solutions in December 2013, announced his retirement on
June 15. Clarke had also served on NRMLA’s Board of Directors.
Fidelity Homestead Associates Receives BBB Accreditation
The Better Business Bureau Serving Greater Cleveland (BBB) has
awarded its prestigious accreditation status to Fidelity Homestead
Associates, a contractor management group that specializes in home
repair and restoration for the mortgage industry.
“We are proud to be a BBB Accredited Business,” said David A.
Michael, Jr., President of Fidelity Homestead Associates. “It signifies
our commitment to customer service, reliability and trust. Our acknowledgment by the BBB aligns with and supports our efforts of
providing superior service in the marketplace.”
Fidelity Homestead Associates offers a wide variety of inspection,
repair and renovation services. A BBB member since 2012, this is the
first year Fidelity Homestead Associates has received accreditation status.
Fairway Voted #1 Best Company to Work For
Two Years in a Row
For the second consecutive year, Fairway Independent Mortgage
Corporation was voted #1 Best Company to Work For in 2015 based
on loan originator votes in Mortgage Executive Magazine. More than
10,000 individual loan originators from over 200 mortgage companies
and banks voted.
Every year, Mortgage Executive Magazine conducts a survey to
select the 50 Best Companies to Work For in America. These extensive online surveys are limited to licensed mortgage loan originators
(MLOs) who must be currently employed by the companies that they
are rating. Any company with a minimum of 30 MLOs is eligible to
participate.
In the survey, MLOs rate their company’s culture, loan processing,
underwriting, compensation, management, marketing and technology. The top 50 companies are chosen based on their average rating
score and total number of MLO votes. Fairway received a 4.94 out of
5.0 rating with more than 800 loan originators surveyed.
Profiles of NRMLA Member Companies
American Advisors Group (AAG)
American Advisors Group
(AAG) is the nation’s leader in reverse mortgage lending, licensed to
operate in 48 states. The company,
founded in 2004 by CEO Reza Jahangiri, is headquartered in Orange,
CA. We are dedicated to helping American seniors leverage their home
equity as an asset to help fund retirement.
AAG holds an A+ rating by the Better Business Bureau, has a 96%
customer satisfaction rating and is a member of the National Reverse
Mortgage Lenders Association (NRMLA). Jahangiri serves as the association’s Vice Chairman and co-chairs NRMLA’s policy committee.
To learn more about American Advisors Group,
please visit aag.com.
Celink
Celink’s Reverse Mortgage
Servicing Mission is threefold.
We Lead — Ethics, integrity, and unwavering core values direct all
of our actions.
We Support — We support our clients through new and often
uncharted territory.
We Innovate — We explore and uncover new and cost-effective ways
to increase our value to our clients and their borrowers.
We meet every industry challenge and every client and borrower
need with the confidence that comes from knowing who we are and
what we’re about. Your reputation and your borrower’s are safe with
Celink. Visit celink.com for a full Corporate Overview.
Ryan LaRose, President &COO:
ryan@celink.com • (517) 321-5491
32 R E V E R S E
Member
Profiles
Liberty Home Equity Solutions
For nearly a decade, Liberty Home Equity
Solutions, Inc. has been committed to helping seniors
gain financial independence and security through
Home Equity Conversion Mortgages (HECMs).
Based in Sacramento, California, Liberty is
one of the nation’s largest and most experienced lenders, focusing
exclusively on providing HECM loans to senior clients and wholesale
business partners. We have helped change the lives of over 40,000 clients
since 2004 while providing education and lending solutions to over
1,000 business partners across the U.S.
www.libertyhomeequity.com
For career opportunities call (916) 589-1853
For wholesale opportunities call (866) 871-1353
© 2015 Liberty Home Equity Solutions, Inc.
NMLS # 3313 www.nmlsconsumeracces.org. For a complete list of licenses,
visit www.libertyhomeequity.com/licensesnmls
LRES
LRES is a national provider of property valuation and REO asset management
services for the real estate, capital market
and finance industries. At LRES, we specialize in helping our clients
effectively manage compliance and financial risks associated with valuation matters. We are the preeminent valuations provider for the
Reverse Mortgage industry and deliver peerless service as we strive to
be your business partner of choice. LRES has experienced significant
growth, regardless of market conditions, thanks to an experienced staff,
advanced technology, solid business planning, efficient operations, and
the support of every client we serve.
Brittany Hurd, 714-872-5872, bhurd@lres.com • www.lres.com
National Field Representatives
Reverse Mortgage Field Services
Dealing with Reverse Mortgages is complex.
NFR is your source for information, expertise, and guidance when it comes to Mortgage
Field Services. For over 15 years, Reverse Mortgage Servicing executives
have relied on NFR to deliver Field Services with integrity and professionalism. We have earned the reputation as a trusted partner meeting
the real-world challenges facing Reverse Mortgage Servicers. Our team
members know family members may not fully understand a Reverse
Mortgage and our coordinators are trained to deal with each situation gently and with compassion. NFR understands the importance of
protecting your professional reputation.
Contact: Margie Schagen, mschagen@nfroline.com
Tel: 866-966-0789 ext. 5220 • www.NFROnline.com
Reverse Mortgage Solutions, Inc. (RMS)
RMS is a full service partner offering loan
origination services, servicing, securitization and
REO asset management solutions. Since forming
in 2007, RMS has built its business through
strong partnerships with Wholesale, Correspondent and Aggregation lenders nationwide. We understand our success
is because of our valuable Partners. We’d welcome any opportunity to
support your reverse mortgage lending needs.
RMS is a Walter Investment Management company, #1 in HMBS
issuance and rated “Strong” by Standard and Poor’s. We’re a proud
member of NRMLA and an advocate of the reverse mortgage industry.
NMLS ID 107636.
Contact: RMS Wholesale Team • Phone: 866-571-8213
E-mail: Pat.Kubert@rmsnav.com • www.rmsnav.com
Reverse Vision
ReverseVision, Inc. provides the leading software and
technology for the reverse lending industry by offering products and services focused exclusively on
reverse mortgages. More reverse mortgages are originated monthly using
ReverseVision’s SaaS solution, RV Exchange (RVX), than all other systems
combined. ReverseVision has partnered with some of the finest and fastest
growing lending organizations in the US to provide solutions to brokers,
principal agents, correspondents, lenders and investors. ReverseVision
is recognized as a driving innovator in the reverse mortgage industry
and continues to improve their suite of products with frequent and
new innovations, improved integrated services, online credited training
and more. ReverseVision is headquartered in San Diego, CA, and
boasts a team of reverse mortgage experts, engineers, business specialists
and entrepreneurs with a combined experience of over 60 years.
www.reversevision.com • 919-834-0070 • connect@reversevisioncom
Reverse Mortgage Funding LLC (RMF)
Reverse Mortgage Funding LLC (RMF) is an
independent, reverse-only company. We don’t
have competing corporate priorities or distracting lines of business. Everything we do is focused
on making reverse mortgages better, in a proactive and nimble way that
benefits everyone. Known for product innovation, exceptional service
and unparalleled secondary market expertise, RMF delivers a wide array
of products and superior pricing. Whether you are new to reverse or a
seasoned originator, RMF has a variety of platforms that help our partners succeed. Partner with us today, and together we’ll create opportunities for a brighter future.
For wholesale opportunities:
Call (877) 820.5314 or visit partners.reversefunding.com
For career opportunities: Email careers@reversefunding.com
Urban Financial of America (UFA)
Urban Financial of America, LLC (UFA)
is a retail and wholesale lender specializing
in reverse mortgages, and ranks among the
top originators in the United States. UFA is
licensed in most states and Puerto Rico. Our
company acts as a direct originator and purchaser of whole loans through our third-party originator channel, and
is one of the largest issuers of GNMA securities.
Our core values guide our business practices; client focus,
integrity, teamwork, respect for each individual, innovation and responsible citizenship. Every day, we are setting the industry standard for client
experience, company culture, and financial performance through
responsible lending.
Retail: www.ufareverse.com • Wholesale: www.ufawholesale.com
Career Opportunities: (888) 622-2073 or recruiting@ufareverse.com
Wholesale Division: Jonathan Scarpati, VP
jscarpati@ufareverse.com or 516-445-9465
Sherry Apanay, Chief Sales Officer
sapanay@ufareverse.com or (855)-77-URBAN
Bulletins
News from NRMLA and Beyond
NRMLA Welcomes Jenny Werwa, New Public Relations Director
When NRMLA decided to create an in-house public relations department, CEO and President
Peter Bell’s dream was to find someone with association experience, financial services experience and
Capitol Hill experience. “I never expected we would find the whole package,” Bell says.
Then Jenny Werwa walked into our conference room equipped with a resume that included PR experience at
the National Association of Realtors, the American Immigrant Lawyers Association and in the office of California
Congresswoman Jackie Speier.
Jenny will be leading the effort to execute the 2015 Public Relations plan approved by the Board of Directors,
entitled “Help More People,” that includes commissioning new and needed research, aggressive press outreach and
creation of a National Reverse Mortgage Education Week.
She also has communications and outreach experience with the American College of OB-GYNs, and Physicians
for Social Responsibility, a non-profit in Washington, DC. She has a BA in government and politics from the
University of Maryland, College Park, and a MA in public policy from George Washington University. Jenny
also serves on the board of directors of the Capitol Hill Arts Workshop.
Senior Home Equity Nears $4 Trillion as Home Values Rise
The NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), a quarterly measure which analyzes
trends in home values, home equity, and mortgage debt of homeowners 62 and older, has reached 189.67, its
highest level since Q1 2007. The RMMI is updated quarterly and tracks back to the start of 2000.
The $63.5 billion increase in senior home equity in the first quarter was fueled by an estimated $61.6 billion
increase in the aggregate value of senior housing and a $1.9 billion decline in senior-held mortgage debt.
The first quarter of 2015 was the twelfth consecutive quarter in which the index has risen, and the $3.96 trillion
estimated aggregate value of home equity owned by seniors is now just 1 percent below its peak level of $4.0 trillion
in Q4 2006.
Current senior equity levels represent a 34 percent recovery from the post-Recession trough reached in Q2 2011,
when levels fell to an estimated $3.0 trillion.
The RMMI increased 1.6% from the fourth quarter of 2014 when the index stood at 186.63. The senior housing
value estimate is based on the Federal Housing Finance Agency’s Q1 2015 all-transactions Indices.
34 R E V E R S E
HUD Issues Modified MOE
Assignment Claim
FHA Extends Due and
Payable Timeline
HUD issued a new Mortgagee Letter (2015-15) under
the subject Mortgagee Optional Election Assignment for
Home Equity Conversion Mortgages (HECMs) with an
FHA Case Number assigned prior to August 4, 2014 that
modifies the MOE Assignment claim requirements previously
issued and expands its availability to a wider base.
This Mortgagee Letter is effective immediately. Mortgagees
must notify HUD of their election to evaluate a HECM
with an FHA Case Number assigned prior to August 4, 2014,
and initiate assignments subject to the timeframes
specified in this Mortgagee Letter.
This ML comes following a HUD review for further
consideration of ML 2015-03.
The Federal Housing Administration has
granted a one-time extension for mortgagees to
submit delinquent loans for due and payable
status, giving them added time to implement
new guidance contained in Mortgagee
Letter 2015-11.
FHA Info #15-42 states, “For HECM loans
that default for tax and insurance on or after
April 23, 2015, FHA is permitting mortgagees to
take a one-time extension, through no later than
October 20, 2015, to submit this due and
payable request.”
Mortgagee Letter 2015-11, which communicated
new permissible loss mitigation options, took effect
immediately when it was published on April 23.
FHA’s actions give mortgagees more time to
update systems and train staff.
NRMLA Pursues Addressing
Issues Raised By CFPB
In the wake of the CFPB press conference accusing reverse mortgage
company advertising of being “misleading,” NRMLA has reached out to the Bureau requesting to view the 97 ads shown
to focus groups to help clarify and address the issues. NRMLA has also requested the ads under the Freedom of
Information Act (FOIA), which allows members of the public to access information from the federal government.
NRMLA has a long history of working with government agencies and the reverse mortgage industry to address
issues and improve the HECM program. This includes working with HUD to encourage passage of the Reverse
Mortgage Stabilization Act of 2013 to provide the agency with the authority to make changes to the HECM
program that would secure borrowers and strengthen the Mutual Mortgage Insurance Fund.
Compliant and appropriate advertising has been a stipulation within NRMLA membership and the association
has implemented an ongoing series of initiatives to try to assure adherence. These include:
• the requirement of signing a Code of Ethics and Professional Responsibility to become a member and as a
requirement for annual renewals;
• an Ethics Committee that reviews advertising of both member and non-member companies and pursues actions
for non-compliance;
• issuance of advisories to members that reemphasize the requisites of compliance;
• a list of unethical advertising practices that is both distributed to membership and posted on our websites.
Numbers
Lender
Total Number of Loans
METLIFE BANK7,760
URBAN FINANCIAL OF AMERICA LLC7,066
LIBERTY HOME EQUITY SOLUTIONS INC6,980
GENERATION MORTGAGE COMPANY5,536
ONE REVERSE MORTGAGE LLC4,803
RMS/SECURITY ONE LENDING4,575
AMERICAN ADVISORS GROUP3,825
SUN WEST MORTGAGE CO INC1,772
THE FIRST NATIONAL BANK LAYTON1,470
CHERRY CREEK MORTGAGE CO INC1,194
Lender
PROFICIO MORTGAGE VENTURES LLC1,744
REVERSE MORTGAGE FUNDING LLC1,708
LIVE WELL FINANCIAL INC1,396
36 R E V E R S E
2011
2013
WELLS FARGO BANK NA17,419
BANK OF AMERICA NA CHARLOTTE12,956
METLIFE BANK10,830
FINANCIAL FREEDOM ACQUISITION3,314
REVERSE MORTGAGE USA INC1,172
2015
Lender
through April
2014
2012
2010
Top Ten Lenders 2010-2015
Lender
WELLS FARGO BANK NA15,673
METLIFE BANK13,593
BANK OF AMERICA NA CHARLOTTE5,037
REVERSE MORTGAGE USA INC966
Lender
PROFICIO MORTGAGE VENTURES LLC2,550
SUN WEST MORTGAGE CO INC1,683
REVERSE MORTGAGE USA INC1,604
Lender
REVERSE MORTGAGE FUNDING LLC1,108
LIVE WELL FINANCIAL INC836
PROFICIO MORTGAGE VENTURES LLC456
HOME POINT FINANCIAL CORPORATION410
CHERRY CREEK MORTGAGE CO INC393
Source: Reverse Market Insight, Inc.
Save the Date
NRMLA
Annual Meeting
& Expo
November 16-18, 2015
The Palace Hotel
San Francisco, CA
Re gister now at nrmlaonline.org
Reverse Loans. One Platform. All Connected.
ReverseVision is the only tool you need to be successful.
Fully-integrated solution spanning loan life cycle
Financial Assessment compliant within RV Exchange
Optimized for retail, wholesale and correspondent channels
No license fee for third-party originators
Integrated workflow connects back office with originators
Compliant docs configured for your business needs
Ship and purchase closed loans collaboratively with investors
Now is the time for HECMs.
Over 25 million potential borrowers are waiting
Financial Assessment (FA) strengthens loan quality
HECMs can be used to purchase a new home
HECMs are FHA-insured loan programs
Financial Planners recognize HECMs as a viable retirement option
WWW.REVERSEVISION.COM | CONNECT@REVERSEVISION.COM | 858-433-4970

The Education of Reza Jahangiri and the Rise of

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