What did one boat say to the other? "Are you up for a little row-mance?" Oh boy. Don't forget the chocolates for your sweetie. If the love thing doesn't pan out, you can eat them yourself. What does the Census Bureau say about Valentine's Day? $16 billion is the estimated value of chocolate and confectionary product shipments for manufacturing. $131 million the value of imports of bouquet cut flowers and buds in February of last year. Of that, the value of imports of fresh cut roses was $72 million-the highest category of flowers. 22,655 jewelry stores sold an estimated $2.6 billion in merchandise.
"I saw a startling statistic the other
day," says John Paasonen, CEO of Maxwell. "Loan officers and their
teams are spending over 40% of their time chasing borrowers for
documents." With the race to cut cycle times, having borrowers complete
tasks faster must be a top priority. Lightweight platforms like Maxwell automate
borrower documents by linking to thousands of financial institutions to
digitally pull in actual bank statements, W-2s, paystubs and full tax returns.
Since these are the original documents, not generated based on raw transaction
data, they are universally accepted by investors. Maxwell is the emerging leader in mortgage collaboration
software that connects loan officers and their teams with the homebuyers and
real estate agents they serve every day. Sign up for a demo of Maxwell to see this automation
at work.
Reverse mortgages: the last chance to lend to
Boomers?
The fact that 10,000 people a day are turning 62 is not
lost on forward lenders. At that point in their life the birthday kids are
eligible for a reverse mortgage, and as forward mortgage volumes drag a little,
lenders are naturally open to offering other products. Reverse mortgages are
increasing in popularity with seniors who have equity in their homes and want
to supplement their income. The only reverse mortgage insured by the U.S.
Federal Government is called a Home Equity Conversion Mortgage (HECM), and is only
available through an FHA approved lender.
But reverse mortgages aren't something that an LO takes a
two-hour class for and is ready to originate. Nor is it some kind of 30 or
45-day rate lock. The sales cycles are many months, in some cases years. And
they'd better be done right, and with a huge amount of customer service - the
last thing a lender wants is the Gray Panthers picketing outside their office.
With an eye on forward lenders interested in seeing what
the reverse world might offer, I received this note from David Peskin, the
President of Reverse Mortgage Funding LLC. "Rob, we
are exploring ways to bring the forward lenders into our world. We
have our own proprietary technology which makes it easier for lenders to
originate reverse loans as well as a full training and development
team. If any forward lenders would like to learn more, they can contact
me."
Reverse mortgages can certainly be part of the overall financial
plan. Jeff Brown in the Wall Street Journal offered up, "New Thinking
About Reverse Mortgages." "'Now is an exceptionally good time to be considering
adding a [reverse-mortgage] credit line to the retirement blueprint,'
says Shelley
Giordano, chair of the Funding Longevity Task Force at the American College
of Financial Services. Interest rates are low, which increases the credit limit
on reverse mortgages, she notes, and if rates rise over the life of the loan,
that will add to the growth of the credit line. Since interest rates tend to
rise alongside inflation, the growing line of credit would provide an inflation
hedge, she says.
"'Research has shown that setting up a line of credit
as soon as possible, age 62, in order to let it grow and only tapping into the
line of credit when needed can substantially improve the long-term sustainability
of a retirement-income portfolio, meaning you can make your money last
longer...The strategy-called a standby reverse mortgage, or SRM, by some-has
been pushed in financial journals by several academics...They recommend drawing
from the credit line when investments like stocks and bonds are down, so the
homeowner enjoys a steady income and gives other investments time to recover,
allowing them to last longer."
The National Reverse Mortgage Lenders Association
introduced three new resources for potential borrowers each geared toward
different stages of the lending process, from consideration to the closing to
the time the mortgage comes due.
The first guide thus first takes the form of a questionnaire,
asking potential borrowers a battery of questions in order for them to consider
how they'd use the proceeds of a reverse mortgage, whether they understand the
responsibilities inherent in taking out a HECM loan, and if they have explored
other potential options for retirement planning and funding.
The second provides a range of information for current HECM
borrowers, including a description of the handoff process between originator
and servicer, an expansive list of responsibilities - such as the payment of
property taxes, homeowners' association fees, and insurance - and advice for
special circumstances, such as medical problems that prevent the borrower from
living in the home over an extended period of time.
The third and final tool walks borrowers through the maturity
of the loan, explaining how the payback process works - along with dedicated
sections for both spouses and children. All three pamphlets were developed with
extensive input from both originators and servicers, along with outside
legal counsel.
Most HECM borrowers are aware of the refinance option
because they had the same option on their standard mortgage. HECM borrowers
have other options, however, which are unique to HECMs and may not be known or
fully understood. If they took a monthly payment but find out later that their
needs would be better served by a larger or smaller payment for a different
period, or by a credit line on which they could draw as needed, they can modify
the transaction without charge. If they had originally taken a credit line and
decide later that they prefer a steady monthly payment, they can make that
switch as well.
Any forward LO looking at entering the reverse field will soon
see plenty of challenges. For a consumer, getting a mortgage poses one set of
challenges; managing the mortgage after they get it poses a completely
different set. The firms that service mortgages work for the lender and their
major objective is to make sure borrowers meet their payment and other
obligations to the lender. Issues important mainly to the borrower usually are
left for the borrower to work out.
HECM reverse mortgages have a major twist: there is no
fixed end date. Except for borrowers who have drawn the maximum cash
permitted on a fixed-rate HECM, managerial challenges are greater because the
reverse mortgage has no terminal date. It can go on as long as the borrower
lives in the house and the borrower always has an option to change the deal in
several ways.
If you want to learn more, and keep learning, you should
sign up for the Reverse Mortgage Daily.
The capital markets!
Last week was characterized by subtle moves in rates up
and down. Perhaps this week will be the same, which would be good as no lender
likes a volatile market. With no news to focus on Monday, bond traders are
yammering about today's appearance by Fed Chair Yellen in front of the Senate
Banking Committee (part of her semiannual monetary policy report before
Congress).
What is the timing of the next rate hike? The Federal Open
Market Committee meets again in March, but the odds, as of this writing, are
slim they will have another increase. But hey, our economy is doing well, and
stranger things have happened. And stocks and bonds tend to reflect
expectations of the future. Regardless, on Monday the 10-year lost about .250
in price and closed yielding 2.43%. Agency MBS prices and the 5-year note
worsened about .125.
This morning we've already had the NFIB Small Business
Optimism Index for January which rose slightly. (My guess is that they had the
number last night - why not just send it out then?) We've also had some
readings on inflation in the form of the Producer Price Index (hot at +.6%,
core +.4%). Ahead are the Redbook Weekly Same-Store Sales Index and a slew of
Fed speakers. Rates are a shade higher versus Monday with the 10-year at
2.44% and MBS prices worse nearly .125.
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