Reverse Mortgages - I Climbed The Summit But It Wasn't There
From the Summit Mortgage Company Website: Wednesday, May 23, 2007
Summit launches reverse mortgage group
Summit Mortgage rolled out a reverse mortgage division today as the firm looks to capture more business from the growing number of Greater Boston retirees. Summit, which was founded in 1996, is a private mortgage banking firm with headquarters in Boston.
Summit cited figures from the National Reverse Mortgage Lenders Association, which showed that Boston experienced a 97 percent jump in the number of federally insured reverse mortgages during the past year; there were 2,263 reverse mortgages in 2006, compared with 1,148 in 2005.
A reverse mortgage "gives our clients financial independence and allows them to remain in their homes as long as they wish without being forced to sell due to rising medical costs or other hardships," Richard S. Fedele, chief executive of Summit Mortgage, said in a statement.
(By Chris Reidy, Globe staff) Posted by Boston Globe Business Team
ALSO from the Summit Mortgage Website:
SUMMIT MORTGAGE TO STOP ACCEPTING NEW LOAN APPLICATIONS
BOSTON, Mass., October 11, 2007 --- Summit Mortgage announced today that it will no longer accept new loan applications and will wind down operations. The company expects that all loans currently in process will be funded.
The Company has been bombarded by a rapidly deteriorating mortgage environment and despite recurring capital infusions is unable to continue operations.
According to Richard S. Fedele, Chief Executive Officer and Founder, "This heartbreaking decision was made only after we considered all possible alternatives. We had the best sales, operations, and marketing teams in the business however, the current mortgage environment proved to be insurmountable."
All inquiries should be addressed to Summit Mortgage's counsel, John Drew, Burns & Levinson LLP, 125 Summer Street, Boston, MA 02110 at telephone: (617) 345-3292.
Summit, like many high flying mortgage companies, thought that it could win at the reverse mortgage business just like it had with every other high flying product that came down the pike. The company delcared that it would "capture more business from the growing number of Greater Boston retirees," nothing about helping the retirees, just 'capturing more business.' As Borat would say, "what a virtuous goal, NOT." Summit Mortgage calculated that with an aggessive salesforce, big advertising budgets and deep connections in the real estate industry it could strike it rich with reverses - after all, aren't they just like any other mortgage product?
Reverse mortgages, as Ed Barrett at Your Home For Life likes to say, are "not sold to people, they are presented and either they are a good fit or not". There are no square pegs in round holes at Your Home For Life. Because of the rapid decline in the availability of mortgage products on the market (especially all those foolish 100% financing, sub-prime loans, and negative amortization loans - the three leading causes of the foreclosures and short sales that we are seeing more and more of in our daily law practice) and the surplus of people who became mortgage loan originators in the past few years; there is a great need for these sales people to feed their families. Unfortunately, too many of them are lured to the reverse mortgage business by the thought of high commissions and easy sales to unsuspecting old ladies.
The reality could not be further from the truth. Reverse mortgages ned to be presented in great detail, reinforced by counselors and require comprehensive knowledge of the underwriting and suitability guidelines for reverse mortgage products. And more recently, an encyclopedic knowledge of the ever improving blend of reverse mortgage products available on the market in Massachusetts.
So, the Massachusetts reverse mortgage market will need to suffer a few more Summits (valleys!) and other over-reaching, self aggrandizing money driven companies that merely see reverse mortgages as another product in their arsenal. The market will not accept incompetent, untrained and unscrupulous mortgage vendors, so we will see more collapses of mortgage companies - some because they just can't get as rich as they used to and others because they can't compete in a market that rewards personal service and suitability analysis in the pre-sale. Reverse mortgage abuses against the elderly will increase before we see the clear emergence of the leading reverse mortgage companies that put training, professionalism and ethics ahead of profits. Your Home For Life, Lentegra (Paulo Schneider), Mortgage Financial Services (Brett Kirkpatrick), Greenpark Mortgage (Paul Conlin) and Wells Fargo (Kathleen Burke) are all solid examples of this committment to service and professionalism.
Expert reverse mortgage originators do well by doing good. It's not about big publicity or reaching summits, it's about helping people and providing a valuable service to the community. What's interesting about Rick Fedele's statement is its complete lack of recognition of his customers, instead, he says "(w)e had the best sales, operations, and marketing teams in the business," with no reference to how they knew or cared for their customers or how their closure will impact their customers - I don't think Rick cares what happens to them. Mortgage customers were just marks for making a commission to Summit - echoed eerily in its curtain call statement.
