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LIME acquires Meritage Mortgage personnel

Dec 11, 2006

Forward on Reverse: Why mortgage brokers and lenders need to be reverse readyAtare E. Agbamu, CRMSreverse mortgage, HECM, home equity, seniors What are you doing to be reverse-ready? What does reverse-readiness mean? To suggest some answers to both questions, we'll check my inbox. The e-mail is from a reader and mortgage broker in the state of Pennsylvania. With the authors permission, I am sharing it with you, for it illustrates a message Ive been harping on in this column for almost five years: As residential mortgage brokers and lenders, we need to be ready for the opportunities and challenges in mortgage lending, as aging boomers transform our culture, our economy and our business. Besides showing an enlightened, ethical, caring and thoughtful mortgage broker, the e-mail from the Keystone State underscores my proposition [see Forward on reverse: Reverse mortgages as risk management tools for forward lenders, May 2006] that reverse mortgages have become essential risk management tools for traditional forward residential mortgage lenders and brokers, as aging homeowners increasingly turn to their home equity "bank" to supplement their fixed retirement income, monthly payment-free and tax-free. Gone are the days when we casually say reverse mortgages are "niche" products for specialty mortgage lenders and brokers. The question today is whether your company can afford to ignore a growing, non-cyclical segment of the 21st century residential mortgage lending market. For anonymity, I have changed some details. Enjoy your reading: Atare: I appreciate the time you spent with me on the telephone yesterday afternoon. As I promised, I am following up today with a telephone call to both recommended lenders. I am also sending you profile of the retired couple in Mortgageville, Pa. with a summary of their needs. Both the husband and wife are in their 60s, and both have credit scores in the 700s. He is a retired constable and district judge, well known in the area. She was diagnosed with MS in the late 1970s and has been permanently disabled since 1978. They have no children and plan on leaving their estate to their nephews and nieces. They believe their home is worth $235,000. This is probably a conservative estimate. Their current mortgage is with Zeus Home Loans [ZHL] with a balance of $135,000.00. They obtained the mortgage in September of 2003 and chose a 15-year term at that time. Zeus, of course, placed its standard three-year prepayment penalty on the mortgage. I've been talking with them since June. My initial reaction was to tell them to do nothing until their prepayment penalty expires in September; then, select a standard FNMA [Fannie Mae] loan with a 10-year term to avoid losing the benefit of their last three years of payments. As I touched base with the wife earlier this week, she told me that her husband was more interested in a 30-year term, reasoning that they would not live long enough to pay off any mortgage, and he wanted their new payments to be as low as possible. Frankly, I knew they appeared to be struggling to keep up with their housing expenses and consumer debt on their current fixed incomes. At that point in the conversation, I knew that I had an ethical obligation to discuss a reverse mortgage, even though I'm not really set up to do them. When I mentioned reverse mortgages to the wife, she admitted that they had briefly considered one in the past, but they understood that when they died, the ownership of the property would "pass to the government." I assured her that was not the case and promised to create a proposal for them on a reverse mortgage. I also want to quickly profile the company I work for, 1st Cosmic Mortgage. The company is headquartered in Ft. Lauderdale, Fla., and it's been in existence for more than 20 years and is licensed to do business in 17 states. I believe the company also has offices in all of those states. Furthermore, it is licensed to do all types of VA and FHA loans. I am the only person in Pennsylvania associated with the company. The Pennsylvania Banking Commission considers this to be the "brick and mortar" office that secures the Pennsylvania license for the company. I should mention that I have the code and passwords needed to pull FHA case numbers in this office. I don't go through Ft. Lauderdale for that process. My immediate boss is in Largo, Florida, near Tampa. She has a partner, approximately half a dozen originators, and a full-time processor. Ninety percent of their business last year was purchase money. During a phone call last week, however, she mentioned in passing that the office had recently received a flurry of requests for information on reverse mortgages, and she asked me if I could recommend anyone. I told her that I would have to take a file to Caligula Financial LLC if I was forced into a corner and had to do a reverse mortgage. We both understood however, that Caligula has a special operation in Reversetown, Colo. that handles the reverse mortgage business nationally. As a result, all of the local work that goes into developing a file has to be done by someone like myself but the only compensation allowed by Caligula is a $500 referral fee to the referring brokerage company after the loan closes. My boss agreed that we need to really get into this business, but must find the right lending bank. Although we do a lot of business with Caligula, the company is not the solution for reverse mortgage fundings. That completes the summary on both my clients and myself. Again, I appreciate your help and I'll keep you informed via e-mail of my progress with those two recommended reverse mortgage lenders. --Steve Sutton, Mortgageville, Pa. Think reverse. Move forward. Atare E. Agbamu, CRMS is president of ThinkReverse LLC, a reverse mortgage training and consulting firm based in the Twin Cities and is a consultant with Credo Mortgage. Atare is regarded as an emerging authority on reverse mortgages and is frequently consulted by financial professionals and families across America. His reverse mortgage interviews have been Webcast on MortgageMag Live! He can be reached by phone at (651) 389-1105 or e-mail [email protected].
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