Reverse Mortgage Radio Show - 04-26-2018
Bruce’s assistant, Mary White, joins the show today to talk about all the steps required in processing your reverse mortgage application. It’s a peek behind the curtain of what is going on to get a reverse mortgage application approved. Here’s a hint…it’s more than you think.
Steps Required To Get A Reverse Mortgage
KLZ's "Ask the Experts" proudly introduces Reverse Mortgage Radio, hosted by
local reverse mortgage specialist, Bruce Simmons. For
15 years, Bruce has delivered homeowners from across the Front Range from costly monthly mortgage payments, relieving financial stress, while providing
additional income for retirement. Bruce wants you to learn the truth about reverse mortgages so you can make an informed decision for your retirement
years. This is Reverse Mortgage Radio.
Welcome to Reverse Mortgage Radio. I'm so glad you could join me today. I've got a special guest in the studio that I'll introduce in a few minutes and
today we're gonna be talking about the processing of reverse mortgages. Basically, a couple of things triggered this. One is we had a special guest
in here, one of my customers, Steve, a few weeks ago and he talked about some of the challenges that he had with a reverse mortgage. One of which was
my assistant, who helped him ... she had to have him on the phone a number of times, trying to get through to his pension company, cause one of the
things we have to do is we have to verify that you have the money, enough money to pay your taxes and insurance with a reverse mortgage.
Those are some of the qualifying requirements and in order to do that we have to get what's called an "award letter" for your pension if you're receiving
a pension and that's what we had to do with Steve. And he mentioned that Mary was really, like a dog with a bone, going after trying to stay on top
of this to get this pension award letter cause they weren't cooperating, the company wasn't. And then also, too, yesterday I met with a customer, real
real nice lady, but she just was overwhelmed with all this stuff.
She's owned her home free and clear. She paid cash for it 35 years ago. I think she has one credit card that she's probably had for decades and she just
doesn't understand the process and it's really hard for her. I tell her, "Look we have to verify your income. We have to verify that you've paid your
property taxes and your homeowner's association, and your insurance, your property insurance. All- we have to verify all this stuff." And she's like,
"You don't trust me? I've been honest my whole life." And on and on and on and it's just such a- it's like pulling teeth to try to get her to give
me this stuff and she's kind of disorganized and she just doesn't have it right now and it's ... She's had medical issues, a number of things and I
try to be patient but she's a super sweet person.
But those things, and I got to thinking, well I really haven't talked a whole lot about all the requirements because she one time I told her something
and she's like, "Seems like I'm doing all the work and you're getting all the money." And I hadn't even taken the application yet. She's just overwhelmed
with stuff and it's easy. She's in her late 80s, 88 or 89 years old and she doesn't have any kids nearby to help her out or things of that nature and
so it's a challenge and I want to explain to people on the radio to prepare you for what is gonna come your way if you decide to do a reverse mortgage.
Actually, now it's almost harder to process a reverse mortgage than it is a conventional mortgage. They don't care about your payment history on your homeowner's
insurance. They don't, as long as it's current that's all they need and most people who have an existing mortgage have their taxes and insurance escrowed.
And that's the case with us too, but a lot of my customers don't have an existing mortgage. They own their home free and clear.
I thought it would be a great idea today to invite Mary, who's my assistant and she's been with me for about a year and she's fantastic. She's- I love
working with her and she really understands what she's doing and I just want to ... I thought it would be a good idea to have her come in and explain
kind of what she does, so welcome Mary.
Well thank you Bruce. I love being here.
Good. Good. Can you tell us a little bit about your background cause I know you've been in different, you've served a number roles in the mortgage industry.
Yes I have. I started in the mortgage industry back in 1985. My first job was just following up on documentation and I was called a Follow Up Processor
and I was given a diary to learn how to do my job. And so from there I went from being an auditor, an auditing manager, a closer, a closing manager.
I was a funder and then I was a warehouse manager and so I've done everything from what they refer to the front end to the back end of the mortgage
industry and this is just with regular mortgages. Prior to meeting you, I'd never been in reverse mortgage, that end of the mortgage industry.
Well that's, so now you've got this on your resume. [crosstalk 00:04:53]
Yes I do.
You've got a lot of stuff.
Yes I do.
And the warehouse manager for those who don't know, mortgage companies have, what they call a "warehouse line." It's like a line of credit, a home equity
line of credit, if you will, and that's how they fund the loans off of this warehouse line. What happens is when we close your loan at American Liberty
Mortgage basically I'm the reverse mortgage manager with American Liberty Mortgage and we fund our own loans, but we don't service them. We sell them
What happens though is at the closing we have to make sure the money is there. We take the money from this warehouse line. Basically the company borrows
it, if you will, they pay you or pay off your existing mortgage, 50, 100 thousand, whatever it is, and then when we sell the loan we make that money
back plus a little bit. Two, three, four percent, or whatever it might be. That's how we make our money. Okay, and so that's what you did as far as
the warehouse manager [crosstalk 00:05:48]
Yes I think that's probably where I got most of my skills that help me in this job today, because I had to go after getting the money to come in. And part
of that was getting- or what they would refer to cleaning up loans, in that they had requirements that hadn't been met or there was something that
was lost or documentation and they wouldn't purchase the loan until we had cleaned the loan up and so that's where a lot of my skills came from. I
had to go after it and drill down to it to get those loans off the warehouse line so that we could be paid.
Yeah and that said, the longer that a loan stays on that line, too, the more expensive it is to the company.
Before we get into a whole bunch of questions, I really should explain what a reverse mortgage is and how to contact me. If you have any questions as you're
listening to this show or you can't listen to it and you want to say "hey I'm interested in finding out about reverse mortgages" call me directly.
My name is Bruce Simmons at 303-467-7821. That's my direct line and what I tell everybody is that's my phone number. I've had that number since 1999
and even though we sell your loan like we talked about, you're still my customer. It doesn't matter who the statement comes from, whether you- I closed
your loan last week or five years ago or, in some cases like little Lillian up in Boulder, that was 14 year ago, I think I closed her first loan and
she called me just a couple of weeks ago with a question. So I went up there to help her out.
But what a reverse mortgage is, is it's a FHA insured loan that's specifically designed for people 62 and over. It allows you to convert a portion of the
value of your home into tax-free money that you never have to repay as long as you live in the house. Now you do have to pay your own taxes and insurance
as well as maintain the home and live there, but as long as you're doing those four things you could continue to live there forever. They can never
kick you out. So keep that in mind that this is a loan, it's still your house though. If you wanted to sell the house 10 years down the road, you can
Any equity that's still in your house is yours. It stays your equity and then- but what happens is you're still charged interest. This isn't free money.
And that interest, along with the mortgage insurance, gets added to your loan balance every month. So your balance gets a little larger every single
Theoretically you could eventually end up owing more than the home is worth and in that situation you win. You've used your equity and you don't have to
worry about it. You're not going to pass that debt on to your heirs because there is mortgage insurance and I've gone into detail about how mortgage
insurance works in past shows. And if you ever want to hear any of my past shows you can go to my website at reversemortgageradio.net. Reversemortgageradio.net
is my website. I've got all the podcasts, I've been doing this show almost a year now. I think come next week it'll be a year.
Yeah I think that's right.
Yes. Imagine that. Who would've thought that I would've come up with enough material to talk on this for a half an hour every week for 12 months. But anyways, and one of the things, like I said, it's funny cause I don't think I've ever really gone into detail into processing. So what I would like you to do Mary, if you could, is tell us a little bit about what you do. I go out and I get an application. I meet with you and I have everybody- I have you sign all the papers. Okay, and then I gather some information from you and then I give it to Mary.
So Mary, then what do you do?
Well after you pass on whatever documentation you've collected I just take a look at it and try to organize it. But one of the first things that I do is
I pull an FHA case number. That's a loan identifier and that's needed because that has to go on certain documents and that's how it's basically tracked.
And then I, in order to do an appraisal I do have to have an FHA case number. So that's why that's the first thing I do. So I will order an appraisal,
set the appointment, they contact them and then at their leisure whenever it is that they need to have them come in they'll do an appraisal. I also
order the title work on there.
So the appraiser contacts the customer directly. [crosstalk 00:10:02]
Yes, the appraiser, you're right.
No I don't contact them. I actually just set the appointment up. But what they do is they contact to verify that the date that I chose or do they need
another date. And I try to set the date out not too far from when you've last seen them so that we can keep this loan on track so that we can close
it and with the way Bruce does things it's- we try to do a seamless closing. Bruce is the face on the loan and then I do everything in the background
so as not to overwhelm the borrower but, like you explained, sometimes they do get overwhelmed and that's kind of unavoidable.
So after that I order title work and that we need to no ... If everything is clear in title. And what that means is there's no other liens and there
are no other problems that an underwriter would take a look at and see as a problem as far as insuring it for FHA. Small things like making sure the
mortgagee clause, which is, it's in the name of American Liberty Mortgage.
And the mortgagee clause is for the homeowner's insurance, cause see-
Yeah, we have to be listed as a lien holder on your homeowner's insurance and if you've got a loan on your house now, whoever you have your loan with,
whether it's the evil empire or your little credit union, they have a lien on your house right, I mean they have a lien on your house but they're also
listed as the lien holder on your homeowner's insurance. So, now that's one of the last things we do, right? Isn't that- I mean we have to verify,
though, that the homeowner has paid on time for the last 12 months.
Well, that used to be. For me, as far as my process, my process has evolved. I start right off at the beginning verifying that they have made their payments
on time. And the reason is, is sometimes that's an easy process and sometimes it isn't. It's just like when we're verifying pension. Not every insurance
company is easy to get through. Sometimes you can just email someone, I would call them, find out who to contact and then just email them and get the
information back. But more and more and more because these insurance companies are getting larger, it is a process of going through prompts and ordering
And what will often happen when you're dealing with a call center is that they're unable to give me what I need to present to the underwriters. So that's what makes it a longer process and that's why I changed the procedure so that it's not at the tail end of loan
And we're still waiting on it.
So you, in order to get a 12-month payment history, we don't want to make the customer give us 12 months worth of checks or 12 bank statements. We want
to get it from the insurance company. [crosstalk 00:12:57]
And nowadays- and there's a form we have that you sign at the application that basically says that you're allowing your agent to verify that you've paid
for 12 months on time. And If you have an agent, whether it's Allstate or State Farm or whatever, you have a local agent. That's the simplest, cause
then we just email that to your agent, they complete the form and say, "yes they paid on time." Whether you pay- and it doesn't matter, even if you
pay annually, they still, we still have to have this form filled out. Say, "Well I pay it once a year. I don't pay monthly. So obviously I'm paying
on time." Well obviously yes, but we still have to know that. We have to verify it.
And that's the thing a lot of people don't understand, is they're like "it's obvious, come on."
And it's not obvious cause it has to be proven.
That's correct and because of my process, I'm not always able to get a hold of a person, so. Other ways of verifying that is making an agent give me documentation
such as a letter that says, "Yes this person has paid on time for the last 12 months." So while that other form works with a live person, sometimes
going through a computer prompt and then a call center, that doesn't work because they're unable to complete it. So we have to look at other methods
of verifying that. And that can be a long term process.
Yeah, yeah it can. And the thing is, if you wait till the end to try to do that-
Then we're ...
We're holding up the closing.
Yeah, we're holding up the- cause you can't, the way it works with underwriting is an underwriter is a person who makes the final decision. So we send
everything to the underwriter and they go through it all to make sure that they've dotted all their "t's" and crossed all their "I's" and then they
get back to us with a conditional approval and then we have to meet all these conditions. And that's-
And if we don't meet the underwriter's conditions then it delays the- delays everything.
That's right, it slows everything down because you submit something, it takes days for them to look at it and get back but if we kind of back up a little
bit, what I also do is once I've reviewed title, the appraisal comes back, so I need to contact title again and advise them that a value has changed
on that. So that's information that needs to be updated as well. That's a process that we go through.
So the title company has to know what the value-
Of the house is.
That's right. So that's a change.
And so review all the documentation that you bring in. I do take a real quick glance through the application to make sure everything is signed. Make sure
there are no judgments on the title and I usually pass that by you too to get your expert opinion on it. And then we also order from the title company,
or I can get online and get it, one-year pay history on your taxes. So we've got to verify the taxes have been paid. No, two years. I apologize, it's
two years pay history. And, like you said, with insurance we have to prove to the underwriter that you're capable of doing that. Also if you have homeowner's
insurance, I have to get a pay history on that. Not homeowner's, HOA. The HOA.
The homeowner's association.
Yeah if you have an association you pay them, whether it's 30 dollars a month or even 50 dollars a year, you might make one payment 50 dollars a year.
We still have to verify that.
Right and that usually has to be something that's printed out or a pay history that's printed out.
Letterhead and all that stuff.
And then the rest of it is like you said, there- we may have to verify a pension payment and like with Steve. Steve and a lot of people that fall within
a certain age group, they're so used to talking to people and having a relationship with people. The prompts on the telephone is what makes them very
uncomfortable. Like the lady that you met for- they are terrorized having to go through that and then having to relate to them what it is I may have
said. We need them to verify this and this and this. And so it's foreign to them to have to relate that information. So what I do is I give them a
call and I will conference them in and then I will go through the prompts so that this is as seamless as we can make it for them at that time.
And then I introduce them and then they're the ones that are verifying information because when it comes to pension, getting written information back? They will not give it to the lender. They will send it directly to them but to shorten the process of time so that we can get this submitted back to the underwriter, if they give us permission to get the documentation then they're allowed to send it to us. So I had Steve just verify that it was okay to do that and we were able to.
It took multiple tries in his case, right?
In his case, yes.
And then also too, now just today you were on the phone with a customer, he lives up in Fairplay, he's 96 years old. This guy, he's amazing.
Sharp as a tack still and he's an amazing guy but you had to conference in for insurance purposes on him, right?
Right, yes, because like I was saying it's not always an agent. You have larger companies like, say, Geico. You're dealing with a phone center and they're
not allowed to do certain things and that one form that we can send to an individual agent, they don't accept. So in order to get the information I
needed ... And that was permission to update the amount of coverage that he needed. They needed to speak specifically to him and they were not able
to contact him directly so that was the reason why we had to walk through getting that information for him. So yeah, we had several tries on that and
we're still working on it.
And that's the last thing we need to close.
That's the last thing that we need to close so ... And you will get information because you're dealing with different people all the time in the phone center. They're not all on page with the same information.
Like calling the IRS.
Right, yeah, right and so I just have a technique. I just drill down on it. I just make people stick to it until I get what I want and usually I get it
Well good. Yeah, and that's one thing too, is that the processing part is so much easier for Mary if- because when I meet with people, I meet with them
typically three times, at least. I'll do what I call an information meeting where we go over numbers and they're looking to see is a reverse mortgage
even make sense. Then, if it does they go talk to a reverse mortgage counselor, then I come back out and we sign all the documents. And literally,
there's like 50 signatures and it's not easy for a lot of people.
And when I meet with people for the information meeting I leave a pink sheet called a "Documents Needed at Application." And on there I list we need copies
of your driver's license, your social security card, your homeowner's insurance information, your mortgage statement. All that stuff and then I also
point out we need your social security award letter. That's what you get at the end of the year that says how much you're gonna make the following
year. So you should've received something in November or December of 2017 saying how much you're gonna be making in 2018. And a lot of people throw
those away or it's like, who needs them? Or they can't find them or whatever.
And then I also put on there, I need your most recent bank statement and I specifically put "all pages." And like this, one of the frustrations for this
poor lady I met with yesterday, she's got four pages for her bank statement and they're front and back, front and back. And her second and third, or
second piece of paper, which contains page three and four of the bank statement, there's nothing on it. One is, it says specifically intentionally
left blank. She doesn't keep them. She throws them away. So that's what I have and so it's hard when we- but she says, "well there's nothing on it."
Well I don't know that. I have to prove that there's nothing on that statement.
That you're not, you didn't just pull out 20,000 or something, I don't know, but they want all pages of- if I ask you for your bank statement, I need all
the pages of the bank statement.
And that's a challenge sometimes for, and it makes your job, Mary, a little more difficult if we don't have everything we need.
It does. It does cause then I have to find ways of backing into it.
And then, after all, said and done, we have to submit the loan. That's not the end of it.
That's the beginning.
It's only the beginning and then once it's submitted then we get requirements from an underwriter depending on what they're looking at and as you were
talking about actually having to contact the borrower, you remember the borrower that had to get a death certificate to prove that she wasn't her mother.
That was a crazy situation.
That was weird. She and her mother had the exact same name, one lived in Aurora, one lived in Centennial and the mom had just passed away and they were
worried because- I don't even know how they- oh they had the address. That address in Centennial. My customer lived in Aurora and her mom lived in
Centennial and that address for her mom showed up on her credit.
That's what it was.
That's what it was.
And we had to prove that the homeowner didn't own that other address because if you own ... That's another thing. If you own more than one home, we have
to verify the taxes, the insurance, the HOA fees, all that stuff on that home too. It doesn't matter if it's a rental, if it's a second home if it's
a place that a cabin in the mountains. It doesn't matter. We have to verify that you've paid everything on time.
Right, absolutely. And in that case, I actually had to get on the phone with her because we had to find a death certificate. She was not able to get it
in the manner that she wanted but just so happens because I do ancestry research I understood there are other places to go. So we actually got on the
phone, called the funeral home, and within minutes was able to order a death certificate.
Yeah, so it took a week but she was from England. She was born in England so she didn't have her own, cause if- cause you were telling me if she could
go to the county records and prove by her birth certificate.
Well, all she would need to do is prove that she was her daughter and then with her own birth certificate or other records and once you present that they
will present a cert.
And she didn't have that because she was born in England.
No. That's right. That's right, so.
That was a weird situation.
So there are all types of stuff that we may have to intervene. [crosstalk 00:23:41]
And do, it's not just a- you just have to be able to do what the underwriter needs.
Exactly and sometimes I can fight. I'll go toe-to-toe with an underwriter and say this is [crosstalk 00:23:52]
Right, you're good at that. You're real good at that.
I lose my cool a little bit sometimes. One time there was a lady, she had an extra- she had a mother-in-law apartment in her basement and she, the underwriter
was saying, "well that's an accessory dwelling unit, which isn't allowed with" ... well it is allowed with HUD but you have to have so many certain
comparables and all this stuff and she said, "well if I take the stove out then it's not- it's just a completed basement. It's not mother-in-law apartment."
And I finally after weeks, I mean this took- we've been going two months now waiting for the final clear to close today. Hopefully, it'll come today.
I'm going to check my phone as soon as I'm done with the show actually.
A long time coming. We've worked hard. [crosstalk 00:24:29]
And this poor lady. I have put her through the ringer. She's had to go to the City over and over and over again. She said they're gonna- they've offered
her a job, she's been there so much. It's crazy but, anyways then the underwriter came back said "okay, well we got this letter from the City saying
this meets all City guidelines. It's fine." And then, but then there's a hood still above the stove that's still there and the underwriter came back,
said "we have to remove the hood and show that the gas line was capped." Well there was no gas line and I flew off the handle at my rep about that
hood thing. I said, "That was not part of the deal. That has to be removed. That condition is wrong."
That's all a part of it. That's all a part of it.
And we got it removed so the customer didn't have to take the hood off and have the City come back out, which would've delayed it another 4 or 5 days.
People don't realize that your loan officer, they're really out there fighting for you to get [crosstalk 00:25:18]
They should be.
Yeah, they are and so.
And so these are these are some of the challenges that we have. It's not- it used to be, well I don't want to go back to the old days but we didn't have
to verify income or credit. If you were in foreclosure, it didn't matter. There's a lot of letters of explanation. If an address shows up on your credit
that maybe you haven't lived there in 15 years, but it still shows up, I need a letter of explanation. And I type it up for you and then I have you
sign it at closing. And the same thing with if you've got- I just pulled the credit on somebody today and they had in 2016 the wife, for some- something
happened and she was 90 days late on a credit card. Well that's not going to disqualify her or make a whole bunch of extra conditions, but she's going
to have to do a letter of explanation. So I'm going to have to talk to her about that when I go meet with her.
And all these extra things and it's not a simple process anymore. But, it's something we understand, Mary and I both do and we are professionals at getting
this done. And if you want it done as soon as possible- and that's the other thing, too is this poor lady I met with last week, she said "I feel like
you're rushing me." I said, "whoa, I'm sorry. I didn't mean to do that." But that's the way- once we get the application we're ready to go.
We want to get it closed. But anyways, you can call me with any questions. If you have any questions about a loan that maybe you started with another company
even and you're thinking, "hey what's going on here. I don't know what- this is taking two months and it shouldn't be." Call me. My number is 303-467-7821.
My name is Bruce Simmons and you can also visit me online at reversemortgageradio.net and I've been in the mortgage business for over 30 years now.
31 years in reverse specializing for 15 and Mary's been in mortgages for years and years [crosstalk 00:27:11]
Since the dawn of times.
So we know what we're doing and we'd love to talk to you about your situation. So please call us. Thank you so much for joining us today on Reverse Mortgage
Call reverse mortgage specialist Bruce Simmons of American Liberty Mortgage directly at 303-467-7821 to begin drawing equity from your home. Bruce will come to you anywhere in the Front Range for an in-person, no obligation consultation. Learn more about reverse mortgages and watch testimonial videos on reversemortgageradio.net. MLS number 409914. Regulated by the Division of Real Estate.