Credit Union Magazine - January 2009 - (Page 26)

mortgages total only about 1% of U.S. households with at least one family member age 62 or older. But demand should continue to increase as baby boomers head toward retirement and seniors face the future with rising expenses, says Seltzer. Credit unions can show they’re trustworthy places for these members to finance reverse mortgages. The three basic types of reverse mortgages, according to the Federal Trade Commission, are: u HUD’s federally insured home equity conversion mortgages (about 90% of U.S. reverse mortgages); u Single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations; and u Proprietary reverse mortgages—private loans backed by the companies that develop them. Members can use reverse funds as they wish—for home improvements, medical costs, or retirement income. While in their homes, borrowers are responsible for property taxes, insurance, and repairs. Retain baby boomers Since more consumers are in the market for reverse mortgages, says Bob Dorsa, president of the American Credit Union Mortgage Association, Las Vegas, “they’re there for the taking.” The average age of an adult credit union member is 47.2, according to the Credit Union National Association’s (CUNA) upcoming 2009-2010 National Member Survey Report. In 2008, the first baby boomers turned 62. Those numbers are important, notes Dorsa, FIGURE I because financial competitors want to wrest these older members away. If your members must go elsewhere to obtain reverse mortgages, they’ll likely take their other financial accounts with them. “Competitors are targeting anyone older than 62, which is the minimum age [by law] for consumers to take out reverse mortgages. That puts a great portion of the credit union’s assets at risk,” he says. To retain older members, “it’s all about the relationship,” says Mary Wetterlin, general manager, first mortgage division at $256 million asset TopLine Federal Credit Union, Maple Grove, Minn. “We want members to know we’re in the financial race with them from start to finish,” she stresses. “When making decisions about retirement and the rest of their lives, a reverse program helps them turn to us. We do our best to make sure it’s the right fit for the member and the specific situation.” Research options Before offering a reverse mortgage program, do your homework, suggests Robert Boucher, senior vice president of lending at $531 million asset Sikorsky Financial Credit Union, Stratford, Conn. Find out how many members are in their early 60s or older and who might be in the market for a reverse mortgage. Ask these members if they’re interested in the product or might be in the future. Next, decide if you want to run the program in-house or use a partner that provides servicing, underwriting, and training, under credit union supervision. If you decide to work with an outside partner, he says, check with the Better Business Bureau, find out if the partner has had any problems with other originators, and ask for financial institution references. NRMLA has a list of member vendors. Circumstances vary as to how credit unions start offering reverse mortgages. At Sikorsky Financial, a steady stream of older members started asking about them. “It wasn’t a tidal wave, but some members had questions,” says Boucher. He researched options, including the Home Equity Conversion Mortgage Program. But Sikorsky Financial isn’t a Federal Housing Administration (FHA) lender. To offer home equity conversion mortgages, “you have to be certified. You have to be a credit union already offering FHA loans,” he says. Another potential reverse mortgage partner was Wells Fargo Bank. Sikorsky Financial decided the relationship would be too risky. Even with a noncompete clause, which means Wells Fargo would agree not to solicit the credit union’s members, there’s nothing to keep members from transferring business to the bank after taking out a reverse mortgage, says Boucher. “We didn’t want to go there.” Instead, the Home Equity Conversion Mortgages* 120,000 100,000 80,000 60,000 40,000 20,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 *Number made each ﬁscal year (Oct. 1 through Sept. 30). Sources: National Reverse Mortgage Lenders Association and the Department of Housing and Urban Development 26 CREDIT UNION MAGAZINE ÑJANUARY 2009 Ñcuna.org http://www.cuna.org

Table of Contents Feed for the Digital Edition of Credit Union Magazine - January 2009

Credit Union Magazine - January 2009 Contents On My Way Leading Edge Spotlight President's Perspective Game Plan Washington Insider Wright Stuff Executive Suite Reverse Mortgages Come of Age Six Merger Myths Leading-Edge Lenders TwentyFour/Seven Bankruptcy Compliance Tools of the Trade Trendlines Rates & Ratios Council Corner Shoptalk System Scan Marketplace Branching Out Advertiser Index

Credit Union Magazine - January 2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.