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HUD’s NBS Policies and the 14 Words at the Heart of the Debate

reverse mortgage newsSemantics. Words do have meaning and they matter. We can recall the testimony of former President William Jefferson Clinton who famously said “It depends upon what the meaning of the word ‘is’ is” Is your head spinning yet?

As industry watchdog and consumer advocate Atare Agbamu puts it “Fourteen words”. At the heart of the non-borrowing spouse debate and subsequent lawsuits brought against HUD are fourteen words found in the original regulations of the HECM program as part of the National Housing Act in subsection J entitled “Safeguard to prevent displacement of homeowner” which reads “The Secretary may not insure a home equity conversion mortgage under this section unless such mortgage provides that the homeowner’s obligation to satisfy the loan obligation is deferred until the homeowner’s death, the sale of the home, or the occurrence of other events specified in regulations of the secretary. For the purposes of this subsection, the term ‘homeowner’ includes the spouse of a homeowner”.

Seems pretty cut and dried? Well, unfortunately not so. A literal and straight forward…

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  1. This is one where I disagree with several of the conclusions presented.

    First, the displacement rule codified at 12 USC 1715z-20(J) can only be applied when there is an event which triggers the due and payable clause. That means it does not matter when a marriage took place as long as the parties are married on the day before the triggering event.

    Also the displacement rule never refers to the death of any borrower because it covers all triggering events. So is there any displacement protection if the house is sold or otherwise disposed of? Well, no borrower has displacement protection in that case so neither would a spouse. However, if the due and payable clause is triggered, by the borrower being outside the home for more than six months or more than a year in case of medical or mental needs, should a spouse be protected from displacement? The answer is a resounding yes since the spouse is the homeowner and thus at least one homeowner is residing in the home!!

    The Court of Appeals did not side with regulations or anything else. It found the law to be valid and thus the litigating spouses won. Yet because the spouses in this case were married to the borrowing spouse at the time of closing and remained so using the collateral as their principal residences through the term of the HECM, HUD wrote a rule that only cuts out these types of non-borrowing spouses but that is not what the law says nor all that the Court necessarily intended.

    Since early August 2013, the Secretary in his discretion has the right to write Mortgagee Letters to reduce financial loss to the HECM program based on provisions like the displacement protection provision. What there is a great deal of question about is whether those rules can be applied to loans with case numbers assigned before August 2013 or must any displacement protection change the Secretary desires about those HECMs come solely from a Congressional change to 12 USC 1715z-20(j)? Right now HUD has done the right thing and asked for that change in the current budget bill.

    So will the most recent three Mortgagee Letters on non-borrowing spouses stand as is? It is very doubtful if Mortgagee Letters 2014-07 or 2015-02 will have to be changed but there are a lot of questions about Mortgagee Letter 2015-03 which may need a lot of tweaking depending on what Congress does and further litigation.

    About Mortgagee Letter 2015-03, Shannon shares: “The current loan balance or unpaid principal balance must be less than or equal to the original max claim amount. That’s a highly unlikely scenario for most HECMs that have been in effect for any period of time.” But if the balance due is over the maximum claim amount (there is only per HECM), in most cases the HECM would have already been assigned to HUD with no need for foreclosure or assignment by the lender. So why the concern?

    (The opinions expressed are not necessarily those of RMS or its affiliates.)

  2. typical government solution ,,how does Canada do R.Ms at age 55 ? how do they treat the younger spouse ? I think Hud needs to listen to somebody other than their young legal team,,

  3. When you are a Hammer, everything looks like a Nail….

    It’s time for our RM Industry to grow up and stop looking for the easy low hanging needs-based fruit of RM Re-fi’s (any Forward guy / gal will tell you that) and start balancing out our Businesses with equal measure HECM Purchase Loans from 55+ Active Adult Builders.

    We haven’t been very successful (a few have) because it is out of our Comfort Zone(s). Our best New Baby Boomer Customer Prospects don’t NEED a RM but they are Likely to WANT one when a savvy LO sells the BENEFITS of it in the context of an overall Retirement Income & Asset Planning Strategy.

    We need to Stop looking for “Seniors” at the Senior Center;
    Start looking for 60’s Couples who like to play Golf and want to gain more ways to create the Retirement Lifestyle they dreamed about 30 years ago and THE Tool that allows them to check more things off of their Bucket List.

    Like it or not, we’re a Phillips Screwdriver now, and we need to go out and hunt for some new precision Deck Screws……

    OR we can continue to Yearn for the “Good Old Hammer Days….”

    • Hey H4Pguy,

      When housing starts are down 6% year over year and most Wall Street observers do not have much hope for better days soon, it is very very understandable why HECM originators are doing things other than seeking out active seniors for HECMs for Purchase. In fact a few significant originators are telling us about their experiences with Realtors which end up being in most cases better leads for Traditional HECMs than HECMs for Purchase.

      Despite all of the speaking you and some others have done in the industry, HECM for Purchase endorsements went down by more than 14% last year. Yet there are more originators than ever before who have been trained to originate HECMs for Purchase and even major lenders with HECM for Purchase origination groups specializing in nothing but HECMs for Purchase. Soon lenders will become ever more leery about investing marketing dollars disproportionately into HECMs for Purchase efforts than other types of HECM.

      Over the last few years you and others have had the time to go out and recruit the type of originators you claim we are missing and yet where has that gone? All of the noise being made about a sleeping giant story is old news. HECMs for Purchase based on the last two years of stats is a minor portion of endorsements at 3.5%. Treating it as such is long overdue.

    • H4Pguy,

      This phrase is quite troubling: “…they are Likely to WANT one when a savvy LO sells the BENEFITS of it in the context of an overall Retirement Income & Asset Planning Strategy.”

      Reading that any financial product is likely to be wanted by a SENIOR if presented by a savvy salesperson especially when it is a non-recourse mortgage being presented in an overall Retirement Income and Asset Planning Strategy context rings in one’s ears like a burglar alarm. Like a burglar alarm it can be warning of a real problem or it could be nothing more than a mistaken triggering of the alarm.

      If the HECM is presented as an mortgage asset which seniors should invest in through REITs and other vehicles and become part of their overall investment portfolio, that subject fits right into the context of the meeting which is excellent although there is still the question of suitability for an individual senior investor. On the other hand if a HECM is being presented as a source of “income” or “supplemental income” and what is being so labelled is nothing more than debt proceeds from a reverse mortgage of which the senior will be the borrower and the savvy loan officer is trying to generate interest in, we potentially have a meeting under a false pretext providing false and misleading information. Even if the correct language of what proceeds are is used, one is walking a very narrow line between a false pretext and context. While certainly no attorney, as a state licensed and sanctioned financial advisor, the quoted statement sounds very much like a very questionable pretext. Again if a savvy loan officer held a meeting titled ” The Benefits of HECMs (government insured reverse mortgages) in Retirement Financial Planning,” such a meeting would hardly be questioned as a false pretext when a HECM is presented as either an asset or a debt.

      Your remarks sound like those of a marketer which need to reined in by legal advisors. It is no wonder you do not use your actual name.

      (The opinions expressed in this reply are not necessarily those of RMS or its affiliates.)

  4. Mr Cynic.
    What are YOUR stats in our industry. If things do not change soon you will not have a platform to espouse your outdated thoughts.
    In order to reach higher, you must broaden your base. We have put up with too many “one trick pony” folks far too long.

    • Bill,

      The horrible endorsement numbers for HECMs for Purchase are the HECM for Purchase news. The NEWS is the trend is down. If what I am saying is old, someone would show it was old but guess what?

      This is the sixth anniversary of the implementation of HECMs for Purchase. The really old stuff is how HECMs for Purchase ARE the sleeping giant of the industry and there are over 2,000,000 home sales per year, 20%-25% of the home buyers are seniors, ad nauseum. All nice information for 2008 yet it lingers in the industry until now.

      I would love to read HUD information showing HECM for Purchase endorsements are already at 20,000 annually with verified signs that they are in a steep growth spurt. Seeing we have so many who call themselves HECM for Purchase Specialists (and I don’t), why are total endorsements of all HECMs for Purchase since 2008 not even close to 20,000, period? Sometimes it seems the number of such specialists outnumber the endorsements each year.

      Few of us in the industry say that the glass is half empty and even fewer who realistically say that the 16 ounce glass has approximately 8 ounces of water in it. Most of us feel so good after saying the glass is half full we really do not really care how much water is in the glass unless there is more than 8 ounces in that 16 ounce glass.

      I am a realistic who tries to describe things the way they are, not how I (or you) hope things are. Don’t we get enough spin from our politicians? If you don’t like the news, then change it!! I will gladly write about that and even you may like to read what I have to say.

  5. Mr Cynic,
    Please accept the following in the spirit of which it is meant. No doubt you have a PhD in HECM Refi.

    55+ Builders who have embraced H4P have seen incremental increases in new home sales of 20-30% (Documented).

    Reality (#1 Trap)
    Expecting Realtors to make this market for us by culling their RE leads based on Age and attempting to motivate “Seniors” to clean out their Basements, Attics, and Garages and put everything in boxes and move across town, is Silly!

    H4P is a different;
    1) Business

    requiring a different;
    2) Lexicon (replace Senior with Active Adult)
    (replace Reverse Mortgage with
    Niche FHA Specialty Lending Program)
    perfect for;
    3) Retiring Boomers who are Hardly Prepared (house is bulk of Assets) and also the Affluent who we teach to look at H4P as a Tool to allow them to buy More 55+ House with Less out of pocket cash, even though they are easily prepared to write a check for the full amount. (Cash Buyer)

    Sr. Leadership is a big roadblock due to their “Manufacturing” mindset built around a 25 year model;

    Cost of Lead
    Cost of Sales
    Cost of Manufacturing


    Using this same spreadsheet, approach and mindset for PURCHASE, has taken us to where we are today as an industry.

    We need to stop selling Reverse Mortgages, and Start helping people to take advantage of the unique BENEFITS of our Offering.

    It takes PROFESSIONAL SELLING SKILLS, and a higher commitment to the Front End of Building Sales, in exchange for much higher Profit and better pull-through.

    We have many built-in Benefits that we don’t talk about because we have never had to, like a loan that is;
    Upside Down Proof
    Short Sale Proof
    Partial Equity Protection in a down market
    Monthly Payment Optional
    Move when you want to instead of when the market lets you
    No Personal Guarantees (a benefit in most States not all)

    Sure there are some extra costs, but the BENEFITS far outweigh them. The FHA Insurance that you pay guarantees these benefits.

    We won’t build Purchase by looking in the rear view mirror every month like we do with Refi. The payoff is Higher Loan Amounts, negligible Deal Volatility, better PAPER for the pool, and an environment where FA will have little impact.


    we can keep looking for Rusty old Nails…..

    PS: there are 6500 55+ Communities coast to coast, most have never heard of it……

    • H4PGuy,

      I am not The_Cynic but your latest reply is startling in the age of its industry vocabulary and the expectations you have in what HECM originators must be involved in.

      I assume when you say things like you do not mean Refi: “We won’t build Purchase by looking in the rear view mirror every month like we do with Refi.” Since the introduction of Savers and Standards, we have three types of HECM transactions: Purchase, Refinance, and Traditional. Traditional HECMs represents the largest segment of HECM closings and includes those HECMs where the borrower does not currently have a mortgage and those who are refinancing out of a non-HECM mortgages. HECM Refinances are what used to be called HECM-to-HECM refinances. See Page 2 of Mortgagee Letter 2010-34.

      Then you say that we have to “replace Reverse Mortgage with Niche FHA Specialty Lending Program.” What nonsense is that? You are not stating that any asset is at risk. Not stating that a HECM is a mortgage is not only illegal but it is also ethically and morally wrong. Who cares about calling it a reverse mortgage since no so called reverse mortgage is in fact “reverse” but HECMs are MORTGAGES where the home is specifically at risk.

      So by your choice of old vocabulary, deceptive definition of a HECM as a loan rather than a mortgage, and throwing off any accountability of how endorsements for HECMs for Purchase are doing, you show a lot of what it is HECM for Purchase Specialists are doing and it is not good.

    • H4PGuy,

      Who cares if you think that you and The_Cynic are at war over who has the H4P PhD?

      I am really lost when it comes to your profit formula. If there are no costs of manufacturing (whatever that is in a mortgage business environment) and no “spread,” how in the world are the sum of the cost of leads and costs of sales equal to profit? I am not the only CPA in the industry but I doubt if any of the others would agree with your formula.

      Your choice of terms like cost of manufacturing leaves people who deal in analyzing profits of mortgagees scratching their heads. It is clear you do not know what you are presenting.

      No doubt, I would agree with the profit formulas actually used by most senior management.

      (The opinions expressed in this reply are not necessarily those of RMS or its affiliates.)

  6. H4Pguy, Ph.D.,

    I just read the other two replies. James seems a little put off by your profit formula. Unlike, James, I have no idea how your formula relates to the profit of a lender.

    What you declare to be “Fact,” I fully doubt. So here is what you declare is FACT: “55+ Builders who have embraced H4P have seen incremental increases in new home sales of 20-30% (Documented).” While you may have statements from the staff of some builders stating exactly that, I doubt if you have gathered the documents verifying that the claim is fact. Also it is doubtful if you have statements from all builders who have embraced H4P, whatever that means. Remember H4P origination even when it comes to builders is much larger than one originator or one lender.

    How is a HECM upside down proof? That is utter and complete nonsense. If the lender is NOT paid in full after selling the collateral, they can seek from FHA the difference between the balance due and the proceeds they received from the sale of the collateral. Further if the borrower wants to pay off a HECM and keep the home, they must pay off the HECM in full!!! It is only heirs who can keep the home for 95% of the value of the home if that is less than the balance due. You are making up your own ideas which lack substance.

    A HECM is not short sale proof. HUD fully encourages owners to make short sales when appropriate.

    Perhaps the worst point is: “The FHA Insurance that you pay guarantees these benefits.” Please point to the page of any FHA document which a borrower signs that shows what HECM FHA insurance benefits are when it comes to Mortgagors. FHA insurance provides no direct benefits to Mortgagors. It is the required structure of a HECM that Mortgagees must provide Mortgagors where we find what we call FHA benefits for Mortgagors but they are indirect, not direct.

    How many of those 55+ communities are coops? Are you really teaching the Affluent? You might be teaching members of the mass affluent but it is very doubtful if you are teaching the Affluent about HECMs.

    Finally, I am not the one claiming to be the H4Pguy, Ph.D. So it is you who claims to hold something that gives you that title. And if you are trying to make a case for reaching out to builders over Realtors, you almost made it. But unlike the games of horseshoes, nuclear weapons, and hand grenades, being close counts for nothing!!!

  7. Guys, first take your Blood Pressure Pill(s), then head back to your respective Laboratories before you cause a scene. This always happens when the Technicians come out of the back room and attempt to help out on the “Sales Floor.”

    I think by you both having such a myopic reaction and view of HECM Refi (Traditional HECM – not to be confused with HECM to HECM) that you have actually proven my point. Your rose colored glasses can only discern shades of pink, when in fact HECM for Purchase is actually a shade of Green ($).

    “Reverse” has always been a slang term, and it tagged along for the HECM ride because it was (and probably still is) the best descriptor of the mechanics of this Deferred Principal and Interest Loan. Btw, HUD does NOT consider it a Negative Amortization Program (NegAm).

    My general point is that as an industry we cannot “Spreadsheet” ourselves out of this situation (although you guys and most others have tried), we have to reinvent ourselves and look for new types of Customers, in different Places with a different Message. If we fail to do this immediately (we are clearly running out of time), we will continue these debates in the Unemployment Line.

    It is this Paralysis of Analysis and quoting chapter and verse of Mortgagee Letters that has created this “Senior” Centric dribble that is less and less relevant as the years tick by. The days of Old are just that, the days of Old. Get over it.

    I have tracked the Retiring Baby Boomer 3rd party studies on this subject since 2007, and unfortunately (for you guys) I have been correct at every juncture since. The RM customer profile of old is morphing into more of the new customer profile of this;
    Cindy B – Indian Land, South Carolina – 1:27

    We have to have the Courage to lock arms and change the Vision of this program away from the 80 year old widows on oxygen at the kitchen table to these Active Adults who would love (and rightly deserve) to have the blueprints to a retirement that they thought had escaped them. Or the well healed Cadillac driving retired Union worker who you just showed how to Live Larger with less out of pocket funds, people like Ron & Peggy S. – Georgetown, Texas – 1:39

    Here is the Kicker;
    Both of these class of folks when indoctrinated into the H4P program have legions of friends (REFERRALS) that will allow us to build Sustainable businesses that go way beyond the dead end that occurs when traditional “Seniors” are embarrassed to tell anyone they know what they just did.

    Do you think you could build a sustainable RM Purchase business around someone like this; Pamela W. – South Carolina – 1:22

    In Summary;
    We have to invest the Time & Resources into continuing to build this out. I can document the 55+ Builder Owner (and his VP of Sales & Marketing) with the 20-30% increase in sales and stood next to him at his annual meeting in recent years in a large ballroom where he informed his builder partners that HECM financing is the future for them, and to make sure everyone spoke to me before they left the conference (200 people).

    They are one of hundreds of 55+ Builders out there amongst the 6500 coast to coast 55+ Communities, with 10,000 new Baby Boomers retiring every day, and our HECM industry has poor HECM Purchase sales?? Hello? (out chasing Realtors).

    This is not “add water and stir” like we are used to in HECM Refi (Traditional). This a highly strategic focused SALES Approach that very few understand, let alone have the vocabulary to even discuss. I do. As an industry we need a Can Do attitude. Lets stop bickering and start helping each other to succeed. It’s not too late….

    • After reading your latest reply I feel like I just read the “clean” parts of the script of the Wolf of Wall Street and am sorry for even having read that.

      Do you really believe the marketing promos of other marketers? I have seen several follow marketing people like you in the financial services industry to their own detriment. One very wise man once said that there is nothing new under the sun and you wasted much time and energy proving just that.

      I am not the one who can convince you to follow law, regs, or even Mortgagee Letters. You go ahead and reinvent yourself and all those who will follow you. You are now on a slope that will yield more endorsements but is headed in a direction I do not want to go DOWN.

      Your statements are reckless and at times demeaning to most HECM borrowers. It seems you agree with the old saying that a sucker is born everyday and are working hard to prove it that is far more than that.

      Just remember next year we will have stats for this year. At that time you will have your chance to glory in how HECMs for Purchase are dominating our marketplace. You will clearly be able to show how you have transformed HECMs for Purchase from a marginal product to being the product that took us to over 100,000 endorsements in just one fiscal year.

      You have some great ideas but they are wrapped up in wild, demeaning, and reckless claims. The latter is what will always hold you back.

    • H4Pguy,

      Since you make such big points about things that do not make sense such as your illogical profit formula and then refuse to answer questions about it, it is not worth my time addressing your irrational dialogue any longer. Perhaps with time, your writing skill may improve but for now so long.

      • (The opinions expressed in the reply above are not necessarily those of RMS or its affiliates.) (It seems I am forgetting my caveat while another is trying to use it.)

  8. H4Pguy,

    What significance does the following have to do with H4P? “HUD does NOT consider it a Negative Amortization Program (NegAm).”

    OK, since you make that point, here is a very simple request — verify your claim. Simply cite where HUD as an organization has ever said that. Can you do at least that much?

    I can call at least two HUD employees right now and ask them to verify your statement. Most of us would recognize the name of at least one of them. I know how each of these people would respond if I answered a senior who asked if the typical HECM amortization showed HECMs negatively amortized by saying that the H4Pguy says: “HUD does NOT consider it a Negative Amortization Program (NegAm).”

    Do you expect us to believe you when you say: “I have tracked the Retiring Baby Boomer 3rd party studies on this subject since 2007, and unfortunately (for you guys) I have been correct at every juncture since?” Where is your evidence? No doubt it is in the same place where you left your citation for your claim about HUD’s position on HECMs as not negatively amortizing.

    Then you say: “… we have to reinvent ourselves and look for new types of Customers, in different Places with a different Message. If we fail to do this immediately (we are clearly running out of time), we will continue these debates in the Unemployment Line.’ Yawn!

    Go H4Pguy go. It is time that you reinvent yourself and actually give some accountability for your wild and ridiculous claims. I know I know if you slow down to do that well the H4P percentage of endorsements will not reach 36% for this fiscal year (oops or was that 3.6%).

    It sounds to me like you and Mike Banner need to get together and figure out if going to Realtors is really as bad as you picture it. After all I bet there is a Realtor involved in most builder referral transactions. Or do you reject all builder referrals that include a Realtor?

    Your technical message wore me out. I am so tired of it that I must quit and actually get something done.

  9. Many of us came to Reverse somewhat altruistically to help Seniors and at the same time make a respectable living along the way. The HECM Program (many make the mistake of calling it a “Product” – which is shop talk lingo – Products come in boxes) has gone thru critical iterations all the way from “Senior Subprime” to where we are today on the doorstep of Financial Assessment.

    There is no shame in a successful Sales & Marketing campaign that creates Suitable Solutions for those who qualify. When you analyze the shifts in HECM Program Oversight via CFPB and Others you’ll begin to see a subtle shift away from individual Disclosure based oversight which is as we know getting all too crazy, towards more of a “Suitability” model more like the Investment landscape.

    There is zero tolerance for anyone to cross the line, and do the wrong thing, however there certainly is room to color outside of traditional Sales & Marketing lines as we re-position our offering for the future.

    Many retiring Baby Boomers are readying themselves to “stick-around” in the home they raised their family in, with expensive oil heat, inefficient windows, lousy insulation and the Energy Bills to go with it (a new home built today is 30% more energy efficient than one built just 10 years ago). They have not yet been made aware of this new FHA Specialty Lending Program (this phrasing lowers the bar to allow a substantive discussion – and we are not hiding the fact that it is a Reverse Mortgage – it’s all over the docs!) we’re just not leading with RM because the common definition brings baggage that prevents people from opening up, engaging and really listening.

    Here is the Key – we are actually taking on the figurative role of a Real Estate Asset Strategist, kind of a hybrid between a Financial Planner and a Realtor, whereby we take a Lifestyle approach at helping retiring boomers to best position and leverage their Real Estate Assets in the context of a Retirement Income & Asset Planning Strategy to maximize rates of return, optimize debt management and overall Cash Flow.

    We take a holistic approach to help boomers design a retirement that includes;
    1) Comfortable & Efficient Living Arrangements (55+ Community Homes – New & Resale)
    2) Productive & Nurturing Lifestyle (Bucket List Planning – doing things that matter)
    3) Financial Certainty (the New Math that features the leveraged Buying Power of H4P)

    These are not Wolf tactics, they are well thought out and tested Sales & Marketing Strategies that are appropriate & suitable for those that they are designed to help.

    We don’t need to battle each other, we need to collaborate and continue to help this new boomer generation of mature adults to everyone’s mutual advantage.

    • H4Pguy,

      Oh sure, we can see how much you are “kind of a hybrid between a Financial Planner and a Realtor.” You have such a real hold on financial issues that you cannot answer the questions James asked you about the profit formula you declare senior leadership uses to analyze what is profit. Your formula is as valid as the rest of the stuff you are promoting. It seems you do not mind saying something which you know is not true if you think it gets your point across.

      Rereading the quotation, are you really that ridiculous? We are not all Realtors (except those of us who hold the related license and designation) or some variation of that. With your sales pitch about the quality of the real estate you propose we work with, you have entered into the realm where some states could require a real estate sales license. Yet we are NMLS licensed or registered residential mortgage originators.

      You know very well the FTC does not care if our actual interest rates are all over mortgage docs, we have to give full disclosure on all specific related loan terms when we walk down that road in our marketing. Calling a mortgage a loan or far worse a non-recourse loan when there is no identification of any asset at risk especially the family home is just plain false and misleading. If you call it loan, why don’t you call it a mortgage?

      You go on to say as HECM originators “…we take a Lifestyle approach at helping retiring boomers to best position and leverage their Real Estate Assets in the context of a Retirement Income & Asset Planning Strategy to maximize rates of return, optimize debt management and overall Cash Flow.” — Do you even know what a HECM is? We do absolutely nothing with any real estate assets of a HECM borrower when we originate a HECM except for the principal residence.

      Like flimflam men not only will you not answer a question where we can see if you really know what you are talking about (James’s question) but you have yet to provide us the citation where you claim that “HUD does NOT consider it a Negative Amortization Program (NegAm).” You remind me of the lead character in one of my favorite musicals, “The Music Man.”

      No one is going to get you to see what you are promoting is dangerous and that no lender will approve it for marketing purposes. You are living in your own make believe world and like a wolf in sheep’s clothing you seem as if you are hoping to pick some of us off. Why? It is hard to tell for now. One thing I know for sure is that you hate the safeguards senior leadership enforces on assets which belong to shareholders. Not only will you not change but I doubt if they will either.

  10. H4Pguy,

    You say the silliest things such as: “The HECM Program (many make the mistake of calling it a “Product” – which is shop talk lingo – Products come in boxes)….” HECMs are not a program, they are mortgages. The HECM Program is entirely different; it is insurance on mortgages which HUD offers lenders, not HECM borrowers. The HECM Program is a mortgage insurance program HUD offers strictly to qualifying lenders.

    You cannot offer a consumer the HECM program. All you can offer a consumer is a HECM. Yet if HUD would allow you to offer it (but they are smarter than that), you could offer lenders to participate in the insurance program.

    Are you really that misinformed about marketing when you declare that “products come in boxes?” Here is what Wikipedia says on the topic: “In marketing, a product is anything that can be offered to a market that might satisfy a want or need …. In insurance, the policies are considered products offered for sale by the insurance company that created the contract.”

    You are right that you are not technical even when it comes to marketing which you seem to think is your forte; guess what guy, it ain’t.

    You are way over your head and sinking badly.

    So once again for someone as unfamiliar with marketing as you so clearly here once again is a common definition of a product in a marketing context: “In marketing, a product is anything that can be offered to a market that might satisfy a want or need.” So that is anything not just things that can be physically packaged in a box, although sometimes I do that with applications and blank mortgage documents.

    You are some kind of marketing guy since you do not know the basics or even simple definitions in marketing jargon. And please stop claiming that the discussion is too technical after all the first part of the name of this blog is “Parsing Words.” You want us to look up to you as a marketing guru but the facts are you just do not measure up. If the kitchen is too hot, then don’t enter it!

  11. Having had some time to read and consider, it is clear that the H4Pguy is advocating by statement and implication that in his builder business model, we subjugate to a builder any legal fiduciary duty we have to the borrower. If that means that we violate state law by acting in such a manner that we are de facto Realtors in violation of state law, that is the price to be paid to reap the level of compensation he claims we can earn in his business model.

    Yes, in many cases the builder is offering a home which is better suited to the needs of borrowers but the question is at what price? Is the builder trying to raise profits by having the actual Realtor push too much house or unnecessary amenities? Since more house and more amenities mean more compensation to us, do we have a conflict of interest if we get involved in that part of the decision making process as is expected?

    In states like California, home mortgage origination licensees have a fiduciary duty to the borrower under state law. So if we do as little as encourage the borrower to consider the additional costs the lender is pushing on the buyer, haven’t we subjugated our fiduciary duty to the will and desire of the builder?.

    To accept the business model of the H4Pguy is to accept walking on a tight rope with a strong wind. Some who are already walking it do not realize what it is they are walking on. While I fully support working with builders while fulfilling one’s fiduciary duty and keeping out of the realm of acting in anyway as a Realtor, I have far too many concerns about the business model of the H4Pguy to recommend it.

  12. Why TRY to make the H4Pguy look silly? H4P is so different that without creative ideas like those of the H4Pguy how is H4P going to go anywhere? The H4Pguy is just giving us some great ideas how to market H4Ps. Why not encourage him rather than question what he writes?

  13. H4Pguy,

    Here is what I just received from Coming of Age. It is written by someone who actually markets to Baby Boomers. Read and learn.

    “Ever Wonder Why Baby Boomers Don’t Respond to Your Advertising?

    By Jim Gilmartin

    As people age, they typically move into the higher levels of personality development and become increasingly resistant to advertising. Having seen and listened to tens of thousands of ads over their lifetimes, it isn’t likely that you are going to come up with an ad that a Baby Boomer views as startlingly original. We’ve learned doing the familiar in an unusual way, provided of course that the customer is qualified for and has a generic interest in the product for which the ad is being done, will increase the effectiveness of your ads.

    Connecting with Baby Boomers in an unusual way means creating messages and images that doesn’t idealize aging or aging people by invoking images that are connected to life as a younger person. A past Duke University study found that older people were more likely than younger people to express satisfaction with their lives. Many will not read messages that talk about “reclaiming youthful vitality” as being one of the benefits of the advertised product.

    Don’t include hyperbole. Talk about the product or service but do it without exaggeration. Don’t present the product as being in a superior class all by itself. Aging Baby Boomer customers generally don’t need or want to be told that an advertised product is peerless. They’ve received this pitch so many times it is no longer believable or at best, a platitude. This approach is typically perceived as hucksterism or deceptively selling fraudulent products or services.

    In our last post we discuss the value of being authentic in advertising and marketing. We’d suggest your message be unusually authentic. This is not a trivial thing. Older people typically have a sixth sense about a person’s real feelings about them. To claim in an ad that the producers of the product or service really care for their customers doesn’t come across as authentic.

    Another unusual way is connecting with older people’s values. The one thing that aging people usually have faith in is their values and what they believe in. So, in creating marketing messages for Baby Boomers talk about them and what they stand for. By aligning the values conveyed by your message with their values you will more likely get them to take notice of what you say and take an interest in considering the product or service you are promoting.

    Finally, avoid creating messages that focus on the Baby Boomer as self-centered. Self-centeredness is more common among younger people and runs deeper. As we age we tend to think more of others and about our legacy and the ultimate meaning of our lives. Ego-centered ads tend to turn off many older customers.

    In summary, when creating messages for Baby Boomers, be real in product and service claims, be authentic in message style and content, connect with their values, and don’t invoke the values of a self-centered person.

    Keep in mind as you ponder the last point that for years many Baby Boomer “experts” predicted that the “Me” generation would enter old age as self-indulgent consumers. That is not proving to be true. For instance, even though many continue experiencing the toughest economic picture since the Great Depression, philanthropy has been on the rise as the population gets older. “Giving back” is a major theme in many older people’s lifestyles and aspirations.

    Copyright © 2015, Coming of Age, All rights reserved.”

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