Skip to main content

Controlling personal calls at the office

National Mortgage Professional
Nov 28, 2008

Forward on reverse: Fixing California's SB 1609: A conversation with James E. Veale of Security One Lending: Part IIAtare E. Agbamu, CRMSreverse mortgage law, annuities, Housing and Economic Recovery Act of 2008 James E. Veale believes California's 2006 reverse mortgage law, SB 1609, needs improvement to better protect seniors and strengthen reverse mortgage origination practice in the Golden State. Among other provisions, SB 1609 barred California reverse mortgage lenders from selling annuities to borrowers or referring seniors to annuities sellers before loan closing or the expiration of borrowers' right of rescission. True to its pace-setting tradition, newly enacted federal law, the Housing and Economic Recovery Act of 2008, followed California's SB 1609 lead in this area. But Veale wants a better law. A senior vice president for government affairs at Security One Lending, James came to the reverse mortgage industry in 2005, following a distinguished career as a certified public accountant (CPA) and partner in charge of taxes with the CPA firm of Miller, Kaplan, Arase & Company LLP. He did tax work at Kaiser Steel and Fluor Corporation. At Arthur Young & Company, Veale handled auditing and tax issues. Along the way, he gave tax advice to many small businesses and to some of California's most prominent families. Below is a transcript of part two of our conversation. Victory for the insurance lobby Atare E. Agbamu: Who drafted SB 1609? James E. Veale: Basically, the law [SB 1609] had a well-meaning source—someone who thought they understood the reverse mortgage and the insurance/securities businesses. In its first draft, reverse mortgage originators and insurance brokers were barred from selling annuities to seniors during the restricted period. When the law began going through the legislative process, the insurance industry took exception and would not support it; hence, their restriction was removed. AEA: In other words, what reverse mortgage originators cannot do (sell annuities or refer seniors to annuity salespeople), insurance brokers can? This essentially negates the purpose of the restriction, right? JEV: You are so right. How much more protected are seniors (or their heirs) as a result of this portion of SB 1609? It seems the annuity salesperson is fully protected, despite any direct or indirect knowledge of the origination of the reverse mortgage, while the reverse mortgage originator is totally exposed. All that an annuity salesperson needs is knowledge of the origination and that person is free to solicit the senior to buy an annuity without restriction. Originator incompetence AEA: You have discussed competency and inadequate training, have you seen evidence in reverse mortgage origination practices in California where a senior has been ill-served because of the loan officer's incompetence? JEV: Absolutely! I have had borrowers say, "No one pointed out the one-year-out-of-the-home rule to me. I expect to be out of my house for more than one year at some point, but hope to be able to come back to my home later. Now I find out that my reverse mortgage will become due and payable while I am gone that year. How can I pay the loan off without selling my home? I never would have taken this mortgage had I known that rule." We've also seen [instances] where people were surprised about other events that cause the loan to become due and payable, such as failure to pay property taxes, insurance and homeowner association assessments. Sometimes, I have even heard people say, after going through a presentation, "I see. You never have to pay that loan back." AEA: Is that fairly widespread? JEV: Even though it isn't widespread, the problem still exists. For example, we went to see an older woman who did not have good eyesight. To expect her to read through all the documents is a terrible business practice. That should not be an expectation! But here is what occurred: We explained the one-year rule to her. And she told us an originator for one of the largest lenders had come to talk to her about the same issues and failed to give her the same information. She had started the loan process with that other originator only to find out from her attorney that this is one of the ways she could be forced to pay back the loan. When she confronted the originator, she backed down and said, "No, no, I think maybe you are right." But she really wasn't certain. Lifeline for a friend's widow AEA: That's interesting. Now Jim, what drives you? You had a full and productive career as a CPA before coming to reverse mortgages. What attracted you to the reverse mortgage industry? JEV: Well, I had a very dear friend pass away and left his widow in a situation where she was very house rich, but very cash short. And she could not physically go back to work. Over time, she was being helped by friends and relatives. She was running short of funds. I visited her one day. As we were talking, I realized I needed to bring her situation to the attention of others. After several meetings, someone told me about reverse mortgages. And after seeing what it did for this woman, I decided that in my retirement, this [was] one thing I really wanted to do. So, that is the reason I got involved in the industry. AEA: What happened with the lady? Did she get what she needed? JEV: She not only got what she needed, but she was able to support her daughter through UCLA (University of California at Los Angeles) and get her into a career almost debt free. It was a big relief to this dear widow. Let there be HECMs! AEA: What else do you want to accomplish in this business, besides reforming the way this business is done in California (and possibly the entire country)? JEV: One of the things I would like to see is Home Equity Conversion Mortgage (HECM) availability for seniors on more types of transactions and properties. The Housing and Economic Recovery Act of 2008 is a big step forward, by providing HECMs for purchase, HECMs for coops and HECMs for more manufactured homes. I would like to see this program spread among as many senior homeowners as possible, so that the seniors who are cash short can find more ready sources of cash, without having to go through the stress of proving income and meeting minimum FICO scores in their retirement years. Read books, find mentors, join NRMLA AEA: From your experience and learning in reverse mortgages, what would you say to those just coming into the industry on being prepared? JEV: When I first started, I worked for a firm that did not have a great training program. I went out, got books and read. One thing this employer provided was access to some very experienced and great processors who saw my interest and really helped me understand the forms, the process and how to keep seniors informed on the status of their loans. I cannot overstate the help of some very dedicated and experienced loan officers. I also attended meetings of some of the lenders we sent loans to. In summary, get training, read good books, and find caring and experienced loan originators and processors who can answer questions and provide guidance. AEA: How about getting involved in the industry's trade group [NRMLA]? JEV: Oh, there is no question. Being involved in the National Reverse Mortgage Lenders Association (NRMLA) was one of the best decisions I have made in this industry. I think their programs are very valuable. Anyone who is going to be in this industry for any length of time should definitely be involved in NRMLA as early in their career as they possibly can. AEA: I agree. Jim, do you have any closing thoughts? JEV: It is both a privilege and very rewarding to be in an industry where you can make a living helping people in need. Reverse mortgage origination is a great career for anyone who not only enjoys being with and working with seniors, but also has the desire to help them in very substantial and meaningful ways. AEA: Thank you, Jim. Atare Agbamu is the author of Think Reverse! (The Mortgage Press, 2008) and more than 100 articles on reverse mortgages. He is a reverse mortgage specialist in Minnesota and an adviser to older adults, their families, professionals and institutions across the country. He may be reached by phone at (612) 203-9434 or e-mail [email protected] To offer comments on his book, visit www.thinkreverse.com and click on the Bookfeedback page. To place an order, log on to reverse.mortgagepress.com.
Published
Nov 28, 2008
Knock Provides Home Swap To Homeowners In Chicago

Fast-growing real estate technology company, Knock, is partnering with 10 local brokerage firms to bring the Home Swap to homeowners throughout the Chicago metropolitan area.

Sales and Marketing
Jul 30, 2021
Ruoff Mortgage Announces Multi-Year Partnership With NASCAR

NASCAR and Ruoff Mortgage, a residential mortgage company, announced a multi-year partnership that will designate the company as the “Official Mortgage Partner of NASCAR.”

Sales and Marketing
Jul 16, 2021
Eye, Eye Sir

When I widened my perspective, solutions seemed to fall into place.

C-Suite Strategies
Jun 19, 2021
Balancing The Busy

What do you do when you’ve got too much business?

C-Suite Strategies
Jun 19, 2021
Face It: Prepping For Live Events

There’s still a national crisis. But mortgage conferences are returning. Here’s how to prepare.

Sales and Marketing
Jun 19, 2021
Hablar Espanol: Your Next Client Is Likely To Be Hispanic

But mortgage lenders aren’t yet prepared for big demographic shift

Sales and Marketing
Jun 19, 2021