In this Issue
State News & Events
Dear WMBA Members,
This is the last message for this year as your President of the Wisconsin Mortgage Bankers Association. Next month you will be hearing from Leo Spanuello who was sworn in as your next President at the installation ceremony on June 12, 2019. Leo and his executive team will be there to guide and support the membership in the coming year, and I am sure they will have new ideas, new people who will engage with the Association for the first time, and offer the membership, support in all that they promote.
It is interesting when talking with people and there are questions of interest regarding the Wisconsin Mortgage Bankers Association. We are all the association’s ambassadors. I would ask that as you network with people, talk up the association, and give the names and contact information to the people on the Membership Committee to continue to promote the benefits.
I talked with some people who recently attended the Florida Mortgage Bankers Association annual conference. They are deep with eight active chapters around the state, the chapters all send a delegation of attendees from their chapter board to the annual state conference, along with opening it up to the general membership. They appear to be deep in “human” resources. This is something we as an association will continue to build.
A reminder to watch for events and activities on the website, the Milwaukee Chapter is in full swing for their Zoo a la Carte event again this year, August 16th, always a great time. Also, the State Golf Outing is slated for September 12th at the Grand Geneva Resort, mark your calendars and get registered.
Look ahead for opportunities as the call goes out for committee members, your insight and help are valuable.
WMBA President 2018-2019
National Mortgage Insurance Corp.
Below is a photo of of Leo Spanuello and Senator LaTonya Johnson at an event that was held last week in Milwaukee. Senator Johnson is member of the budget writing committee.
Congratulations to the newly installed Executive Committee and Board of Directors. Installation was held on June 12, 2019 for the 2019-2020 term.
Friday, August 16, 2019
Back again this year is the great event at the Milwaukee Zoo with the WMBA Milwaukee Chapter. We will be at a new location: Tembo Trail Picnic Area.
Registration deadline is August 8, 2019
Sponsorships are also available including:
2019-2020 Board Officers:
Teressa Rowley, President
Todd Snodgrass, President-Elect
Steve Luedtke, Treasurer
Jill Meier, Secretary
Margaret Haagensen, Past President
Kristen Krabath (new)
Matt Pierce (new)
Mimi Druck-Weitkum (new)
President - Amy Gile-Enge
President Elect - Mike Odden
Treasurer - Corey Randl
Secretary - Kristin Nesbitt
In addition, newly-elected board members for the 2019-2020 Madison Chapter Board are:
Below are photos from the installation.
While prior reports by LendingTree have found single women own homes at higher rates than men, the Consumer Finance Protection Bureau (CFPB) reports that women have less knowledge on mortgages than men, possibly leading to higher costs.
About Author: Mike Albanese
Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
Bringing HECMs Forward: The Best Way to Serve Senior Borrowers
By Wendy Peel
Over the past three years, more than 2,000 lenders and brokers have added the Home Equity Conversion Mortgage to their product mix--yet HECM volume remains a tiny sliver of overall loan production.
There's no shortage of eligible HECM borrowers. Every day, more than 10,000 Americans turn 62, the age of HECM eligibility. This group holds more than half of the estimated $12 trillion in U.S. home equity.
My observation is that qualified borrowers that could benefit from a HECM are not presented with the loan as an option, simply because traditional loan officers have neither been trained on the product nor do they have access to product selection and pricing engines that compare the merits of the HECM against borrowers' other options. Most senior borrowers will be presented with every other type of mortgage option by loan officers but will likely only be shown a HECM if they independently seek out a reverse mortgage specialist. By virtue of its absence in the comparative decision process, the HECM product is underrepresented and senior borrowers are underserved.
If you need proof, look no further than data shared by the STRATMOR Group at the 2018 ReverseVision User Conference. Analyzing its MortgageSAT survey data against overall lending production data, STRATMOR observed that approximately 1.3 million borrowers age 65 and older took out a home loan in 2017. Although many may have been qualified to be shown a HECM, the vast majority were likely not given the opportunity to see the unique aspects of this product.
The fact is nearly all seniors who purchase a new home or leverage their home equity will walk through the doors of a bank or traditional independent mortgage bank or broker and never speak to a reverse mortgage specialist. Most senior borrowers do not know to ask about HECM and reverse loan options because they assume that their loan officer will present them with the best products for their financial needs. These borrowers are unware that even if a HECM or reverse loan is the best financial product for achieving their retirement and financial goals, a traditional loan officer will almost never present them with this option.
A House Divided
At one time, this approach made sense. Following the housing market crash in 2008, lenders of all stripes were worried about reputational risk. The HECM of that era was a different product than the program offered today, and it was not without its flaws. Though insured by HUD, early HECMs had fewer consumer protections than today's loans, so they carried reputational risk.
Additionally, HECM and reverse products are designed to serve borrowers with different financial objectives than the typical forward loan candidate, and must be processed differently than traditional mortgages. Understandably, these "differences" caused firms to create "different" entities to focus on them. Taken in combination with the fact that early reverse mortgage origination technology was unable to "speak" to lenders' core loan origination systems, the decision to silo becomes easy to understand.
Unfortunately, isolating HECM operations has had unintended negative side effects on both lenders and the consumers they serve.
First, treating HECM origination as a separate business feeds the myth that the HECM is a complicated product difficult for the average, "non-specialty" lender to understand--and therefore, "non-specialty" originators can't be expected to offer the product, even to qualified customers. In truth, claims that HECMs are difficult to originate are overblown. Because the HECM is so versatile, it has a lot of uses, some of which are complex--but the core concept and execution is actually pretty simple. The mortgage world already handles loan products that are different and complex in a seamless way. Consider construction, renovation, state bond down payment, relocation, bridge, medical professional and agricultural loans, just to name a few. HECMs could be included alongside these specialty options using a similar process.
Second, sequestering HECMs prevents sharing of resources and sales leads between a lender's forward and reverse teams, making HECM lending less efficient and profitable than it should be. The highest-cost element of loan origination is not technology, fulfillment or overhead--it's sales and marketing. Sales and marketing expenses are the primary limitations of the HECM product--not applicability, acceptance or fulfillment. Separating forward and reverse loan operations means doubling up on costly lead acquisition activities.
Third, segregating HECMs often leads to technology decisions being made in a vacuum. Instead of engaging their IT, operations and compliance functions to go through a formal vendor selection process, many lenders give their reverse mortgage division leaders carte blanche to negotiate contracts for enterprise-grade HECM origination software. This is troubling from a risk management perspective and can introduce inefficiency if the chosen reverse mortgage technology can't "speak" to the lender's forward LOS.
It's an expensive, self-limiting approach--and one that is no longer effective. That's because it undercuts lenders' ability to deliver tailored loan offerings and reinforces the notion that a HECM is a last resort "special offer" rather than a normal loan program, which in turn contributes to consumer discomfort with the HECM product. Worse yet, once doubling down on marketing costs proves unsustainable, HECM sales efforts are the first to go. As a result, many consumers who could benefit from a HECM never hear about the benefits of leveraging one.
Which brings us to our final and most important point: running HECM operations as a separate business is bad for consumers. This is a hard truth that can be uncomfortable for dedicated HECM only originators, many of whom chose their line of work especially because of their interest in helping senior borrowers. Unfortunately, the research is clear. Most borrowers 62 and older are never presented the HECM as a loan option. Specialized HECM operations likely do a great job of serving the customers they reach, but they don't reach enough customers.
‘But I Have a Referral Program'
A Better Way
Just as most lenders have experts on staff for specialized products like non-QM and rehab loans, it's perfectly appropriate to identify reverse mortgage specialists that can act as HECM concierges and assist the broader team with questions. Instead of isolating these experts in a separate division and treating them like referral partners, lenders should position them as trusted resources that enable every LO in the company to feel confident offering HECM loans.
At the California Mortgage Bankers Association's Western Secondary conference in July 2018, a panel of five private investors emphasized the importance of training LOs and setting them up to succeed with non-agency originations. That means not only teaching LOs the nuances and applications of these products, but also compensating those who apply their training. The HECM can be a surprisingly rewarding product for both lenders and LOs when managed this way.
Lenders should engage their forward IT and operations resources--not simply their HECM specialists--in selecting and implementing reverse mortgage software. IT teams have the knowledge and resources to ensure reverse mortgage technology is implemented properly and leverages all products to the fullest capacity, from initial qualification and education tools within the CRM all the way through to data collection and reporting.
By applying a consistent, centralized approach to assigning and managing HECM software licenses, IT can significantly reduce licensing costs and third-party risk. They'll also enjoy superior data management, which comes with a host of benefits ranging from more efficient reporting and management to more transparent LO compensation. Centralized tech management makes lead management easier and reduces acquisition costs, yielding higher marketing ROI. Further, by engaging IT, lenders can make HECM software support available through the standard help desk.
Now is the Time for Change
But the numbers don't lie. The current, siloed approach is not the best way to serve the senior borrower whose circumstances it was designed to help. We are simply not reaching the majority of the borrowers that the product can serve.
The call for change is clear. While technology continues its evolution toward offering the HECM alongside more traditional loans, lenders must train loan officers on HECMs just as they do their other non-QM offerings. Integrating HECM processing and underwriting into existing teams will further normalize the product, and marketing HECMs alongside other offerings will save lenders money while improving the credibility of both the company and its HECM offering. All of these adjustments will provide a better experience for the consumer.
With regulatory changes that have made HECMs increasingly like traditional loans, and a market ripe with opportunity for growth, now is the time for lenders to gain a competitive edge by embracing HECMs as they would any other non-traditional loan product.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at email@example.com; or Michael Tucker, editorial manager, at firstname.lastname@example.org.)
Click here to view the calendar register for the upcoming webinars
Wisconsin Mortgage Bankers Association Online StoreThe WMBA and the MBA have teamed up to bring you great access to the education components you need to stay current in the Mortgage Banking Business.
For every product purchased through the WIMBA-MBA store the WMBA receives a % back.
Please use the link below to help support our Association!
Wisconsin Mortgage Bankers Online Store
Remember to check back often!
Return to Top