Simple Reverse Mortgages and Reverse for Purchase, with Nina Penny, CRMP

0:02 Welcome to the Reverse Mortgage Podcast, I'm Bill Gross, at Bill Gross Probate on social media we get together regularly to talk about reverse mortgages with the best practitioners in the business one I'm really lucky to have here today is Nina Penny who has simplereversemortgage.net as a website and as a as a reverse mortgage Pro Nina thank you so much for joining us today thanks for having me Bill one of the things I noticed right away is that you have your designation CRMP can you describe what that means I believe a certified reverse mortgage professional exactly there's right now about 150 to 160 who have this designation throughout the country it is a designation by NRMLA, which is the National Reverse Mortgage Lenders Association credentialed basically you have to do so many reverse mortgages you have to go a background check have a recommendation and have done so many loans and take a test to earn the cred credentials and one of the reasons why I reached out to that organization to find guests this podcast is as a professional I know there's a difference between if I ask any mortgage originator in the country who may have never done a reverse mortgage maybe came in spell reverse can you do reverse mortgage they almost all will say yes, and many of them won't do it well and yet the qualifications for yours this is not just a program that get sold you have to like really do actual numbers of loans and they actually verify your production correct so good so I guess I make that important distinction when we start from the beginning so let's talk about the reverse mortgage product I think that having been a producer a long time ago when it first came out there was a lot of fraud with the original versions of reverse mortgages have been corrected and I think this day has a lot of the negative connotation to it overall but really it's a very powerful tool so I guess one of the questions I'd ask you is obviously people call you and say I want

2:03 To reverse mortgage that's an easy question but when people don't know that's the product that's right for them and you recommend it there must you must see the same I do sometimes some push back how do you explain the product and its Evolution you know I think one of my Realtors® said it best is that this is not your parents reverse mortgage meaning that this product has really evolved since the 60s it is not that product anymore today we look at a reverse mortgage primarily just an FHA loan that you don't have to make payments on you just have to pay taxes and insurance and HOA and then it has additional benefits perhaps of either taking some Equity out regularly the monthly installments or having a line of credit you can access later built into the same loan yes how you utilize the funds is totally up to you so you can use it any way you want you can take it when you need it you can leave it in the line of credit which has an incredible growth rate to it right You can take it as a monthly payment or you can set it up for a year for so much amount of money and then reduce it or increase it's your money how you use it is up totally up to you I think that part of the challenge is the it's so powerful and it's complicated that people just look for you know it's like reaching for a tool they'll get the job done rather than really saying well how can we really use this as part of our structure and that gets down to you know understand the product and its details rather than just issuing loans so let's talk a little bit about the product and how you get involved with it what percentage of your business of reverses is purchases which I'm guessing is really small versus you know more standard reverse mortgages I would say 40% of my business is reverse for purchase wow whoa 40% that's a big number compared to most Originators yes and I'll tell you yeah and I'll tell you why really it is because I work a lot with real estate agents and I present to a lot of real estate agents and I explain to them you know when to

4:07 Introduce it how to introduce it a lot of them will just call me and say you're on speaker but I think it's also educating Realtors® of how this product can work I think that is really powerful I've I have Realtors® who sing the Praises of reverse mortgages and bring it up comfortable to bring it up and I think that's why I've done a lot of leg work in 12 years to get there well that's why I'm glad to have you here because I know that so many the Realtors® I work with aren't even aware of the product and I just feel like particularly when people are older you know they might be buying their last house and let's get it set up correctly and that could mean get the right kind of mortgage that could mean get the right kind of equity line so you can access your Equity before you need it that can mean a lot of different pieces of it how involved so that's staggering I've never heard anybody say 40% I've asked that question a bunch of times and it's usually 10% or zero you know I and I often get you know I know we should do more but I don't and I'm available to do them so well let me go back then let's talk about education how do you educate your Realtors® what's that look like well I think how I like to educate the Realtors® is they have to understand exactly how it works right so if I stand up with a Power Point you know they read it they don't pay attention but I'm visual and I believe that most people are visual so I come with my props and I show them with my props how the product works and they get it and usually by the end of my presentation you know they have no questions wow yeah wow and so is this something you offer like for teams when they do staff meetings or how do you get involved yes and I will travel you know like to California or in Arizona states where I'm licensed to do loans I'll go and I'll do presentations for offices wow and it's incredible because before I started with my props people had so

6:13 Many questions like they were baffled they really still couldn't understand how it works but with the props they could really see it because it was visual see one of the things I tell people is when you're a senior buying a property for cash often times you're downsizing so they're selling I have customers who move out of Pasadena or West LA and they're selling a property for $2 million maybe they have a million and a half of equity they're going to buy a house in Scottsdale or Florida for $800,000 or a million dollars they have the cash already they already have other investments in many cases don't really need the money I say to them either way get the line of credit at least so you can access your Equity can you talk a little bit about what's the cost if you don't if you don't need the money now of course you know you don't want to borrow money when you need it you want to borrow when you don't need it right what's the cost of setting up a reverse for purchase line of credit when you don't need it what's the actual cost out of pocket to do that well so if to do it for a purchase right it works differently than if you already own the home right so let's say you're going to do a reverse for purchase and you want to set up a line of credit okay so what happens is that for the reverse purchase you'll come in with a specific amount down payment and we're going to give you a loan for the balance to make up the sale price now if you want to set up that line of credit you would do what we would call overfunding the reverse mortgage so you'll bring in more money than what we require you to bring in and that money will automatically go into the line of credit now anytime you make a payment to the reverse mortgage on the adjustable rate loan you will it will go into the line of credit so you'll have access to it again the big Advantage I see of doing it at the time of purchase is you're already paying for escrow and title when you're buying the property versus on refinance if you just decide to set up unless say you buy the

8:16 Property for cash and a year later you went set up the loan now you're kind of paying for escrow and title on your own a second time yep number one number two you have to go through the procedural process of doing it versus doing it at setup so if you don't need the money it seems to me the opportune time to set up is that the time of purchase absolutely but even if you intend right to set up that line of credit in the reverse mortgage right but you're unsure with the new move how much money you're going to need how much really do you have to overfund as we say you could do on the adjustable rate loan only you could do it and just put down the minimum amount and then in three months or four months when you realize you know what you can you can pay into the reverse mortgage and it will go into the line of credit so you can build it up that way through monthly payments if you wanted so unlike a regular mortgage where once you prepay a substantial amount you're lower your a regular mortgage you're lowering your interest costs most commonly it doesn't change your monthly required payment now there are some exceptions and ways to work that but generally speaking your payment doesn't change with a large prepayment of principal but in reverse mortgage you can make that PR payment and then turn around you know later and pull it back out if you have credit set up ex exactly you know once if you pay cash right and that's saying three years from now you need money you're GNA have to do a refinance cash out which is going to be a higher rate than just a rate and term on a traditional loan higher qualifying Cash Out is much stricter underwriting than a regular Finance which makes that doesn't make sense in some cases and you might not maybe you're retired now maybe you have no income other than your Investments much harder to document much harder to prove your income maybe later and you've now foreclosed the opportunity to refinance because you're no longer as easy to qualify as before exactly and the nice thing about that line of credit is this is that I get people that say I don't need the money today right maybe they own their home

10:19 Now and they say I don't need the money today you know when I need it I'll take it out but in that case if you take it out today and you don't need the money your growth rate is if your interest rate is 6% your growth rate is going to be 6% so when interest rates are high now why not take advantage of that and let that money build up for when you do need it if you if and when you do I that's the key part the other part is I think it helps transitioning out of the property meaning of have cases where you know Mom or Dad are elderly and they're going to be moving in six months or a year you know the nice thing about the reverse mortgage is they can take the money out and buy the next property now that causes a need to sell the house but you can do it in an early manner they already have the equity out before they sold the property versus waiting do they sell the property and then you have to kind of rush you know the move out the move in and all kind of happens at one time the reverse mortgage can be part of a strategy to help people make that like a two-step process yes however if you're going to do a reverse mortgage on your primary residence to buy a new one you know usually they need to keep the loan on the books for 12 months so we kind of let people know hey you know what you got to keep it for 12 months right otherwise it's an expensive loan number one and number two you know it's whatever a loan officer or a company the loan officer that you really liked working with they would come and take back their pay if it's less than 12 months but if you said up five years ago like I said people should oh yeah if you house a lot of equity you should have a lot of credit on it absolutely 5 years later and you decide well Mom's going to move out she can advance the money buy the cash property and then in an early manner sell the house and pay it off and everybody's straightforward going exactly right perfect one of the areas that I deal with is reverse mortgage servicing and I think what one of the things that changed was it used to be the reverse mortgage companies were kind of consumer

12:24 Facing companies that would do loans and kind of like a bank a Bank of America Wells Fargo had relationship from both the origination of the loan and continuing it seems like now the lenders all seem to sell servicing when comes time to close out the loan when the when the party is passed and I've noticed that almost every single time it's a mortgage servicer who they're just going to foreclose like they're going to talk nicely on the phone but they're going to move it forward and oftentimes families don't realize that it's not that you have to move the day Mom or Dad pass but you've got to get a plan together with that first 30 or 60 days and get the plan moving somehow so you can effectuate that so when people call you and say hey Mom and Dad passed I know you were the lender that did the loan what's your best advice for them to make that transition as smooth as possible number one I tell them automatically get in touch with the with the lender because some people say you know nobody knows mom just you know passed away but you know what they know right away yeah Social Security they know right away somebody's past so it's best to let the lender know mom passed you know immediately they send out a letter it's pretty it's not you know it's pretty forceful but it's for the purpose of contacting them and letting them know they will extend give extensions to it if need be right basically they just need to make sure that you know if the person's deceased taxes have to be paid Insurance still has to be paid HOA has to be paid you know they need to make sure everything is up to date in order and that you know you're not just deciding to live in Mom and Dad's house right that's their worst case scenario is there's a child living there and they don't make a payment for six months and then month seven they get the notice of default and they're wondering what's going on I think as a real estate agent I often have customers call me and I say to them let's take a look at it if the property is in a

14:26 Trust then you have an administrator you have a processes to find what to do with the property if the property is not it has to go to probate and that can take some time and lenders are wary of that so it's important to get the right team going and contact the lender with the hey we're going to file we expect to have letters within 35 days and we'll reach out to you when we have that because they want to see that you're actually taking proper steps and so that's where I kind of get involved with those servicers as and I love that service bill I love that service I think everybody I think every loan officer should know about it you know everyone should be able to refer you because we get people kids or heirs very stressed out you know very stressed out over it at a time when it's very difficult well and to have somebody to help them guide it you know part of stress is I think that they like to live there forever and not make a payment and in most cases that's not an option particularly there's multiple heirs it's never an option if they're the lone heir sometimes there things that can be done and those are things are things you also can talk about pre decedent where they can have insurance mortgage insurance that can pay off the balance because the kids not going to qualify for the reverse mortgage they're not the same age there's ways to plan for that ahead of time that can make that work and so again I people reach out to your mortgage professional reach out to your real estate professional and anywhere in California love to help you I actually have a national platform and we actually work with reverse mortgage Services across the country so if I can help it all please reach out I really do and for anybody that has reverse mortgage and maybe the family I would really consider because we got real estate agents that you know get stressed out dealing with servicers I mean I honestly see such value in what you're doing thank you yeah that's really sweet well Nina can be reached at simplereversemortgage.net we'll put that in the description down below and you see on the website you

16:29 Have a learn more get started contact us but so is that the best way for people to reach you yeah ABS you know what calling me is the best, I always have my phone with me, even if you just have a question I'm happy to help well Nina, it's always great to talk to professional really appreciate your time and again you can reach her at simplereversemortgage.net and our contact information is on the website phone number and email such as well as information about reverse mortgages Nina, thank you so much for your time today I really appreciate it thank you Bill it's been great being here thanks for having me sure and for the rest of you this is the Reverse Mortgage Podcast we do this we interview some of the top Professionals in the country we interview vendors to help support their business about reverse mortgages it's an important topic I think most importantly one where education can help people get the best income best outcome you can continue the conversation on our Facebook page the Reverse Mortgage Podcast is the name of the Facebook page you can put questions there if you're looking for referrals great place to do that and to reach out again I'm at Bill Gross Probate on social media thank you so much everybody have a great week