Many times I have been quoted as saying the purchase reverse mortgage is truly the “Sleeping Giant” of the reverse mortgage industry as well as the senior real estate market. And many times I have been told how terribly wrong I am.
That is usually followed by a long diatribe of statistics from the last six years proving beyond a shadow of a doubt this product has not even come close to being successful. But future success does not rely upon past performance. In fact, it’s quite irrelevant.
So, again I will ask: Has the HECM for Purchase failed the reverse mortgage industry or has the industry failed it?
As Founder of the American C.E. Institute, I have had more than 3,000 licensed real estate agents attend my Purchase Reverse Mortgage class. Every class has produced very positive reactions from all that have attended, and every class produced business. Well then, why aren’t we as an industry writing a ton of these? And here is a better question, with more than two million licensed real estate agents in this nation, according to the Association of Real Estate License Law Officials, why have only a small fraction been exposed to this product?
Here is why: The reverse mortgage industry is not equipped to do business with Realtors. And when I say the industry I mean most underwriters, closers, processors right down the line to most loan officers. And even the ones that are equipped will simply not put forth the effort or the hard work needed to establish a large group of referral partners.
According to a recent NAR (National Association Realtors) study, slightly more than 5.1 million homes were sold by licensed real estate agents in 2014. Approximately 14% of those mis sold ppi on your mortgage. That is more than 700,000 potential H4P clients!
That’s right, more than 700,000 potential clients. Now, how many of those have the necessary down payment needed to consider an H4P? That in itself is a great question and unfortunately there are no solid statistics to venture an accurate answer. But I’ll guarantee it’s a big number.
Let me share with you some of the comments I hear from within our industry in regards to doing business with Realtors:
- “Real estate agents are so hard to teach.”
- “Trying to deal with Realtors is like herding cats.” (That seems to be a very popular one for some reason)
- “It’s so hard to get that first appointment.”
- “You know a lot of them own their own mortgage company so why bother trying?”
- “Most Realtors don’t really sell a lot of houses, you know.”
- “They call me at night and on weekends to qualify their clients!”
- “They expect me to drop everything when they call.”
- “They just don’t get it” (News Alert: It’s your job to make them get it)
- “I went back and saw this one agent 3 times and he still hasn’t given me a loan!”
- “It’s so hard to get past the receptionist.”
- “Realtors are very rough to do business with.”
And there are so many more, but here is my favorite: “I didn’t get in the reverse mortgage industry so I would have to get up every day and go talk to Realtors.”
Some people say, “this might be a small niche in our industry.” A small niche? As stated above, more than 700,000 people purchased homes last year above the age of 62. As we all know, 10,000 people a day are turning 62 years old in this Country for the next 19 years. That’s 70,000 per week! This program was made for these aging Baby Boomers.
That doesn’t sound like a niche to me. That sounds like a huge segment of market share just waiting to be educated on this product.
Given there are 2.1 million licensed real estate agents in this nation and 10,000 people each day turning 62 years old for the next 19 years, and we closed less than 3,000 H4P’s last year.
A product that allows clients to retain tens of thousands of dollars, and in many cases hundreds of thousands of dollars in liquidity and obtain their goal of no monthly principal and interest payment during the retirement portion of their lives. A product that, in many cases, allows a client to truly purchase their dream retirement home, rather than “settling” for a lessor home due to losses taken in the great recession in the last several years.
A product for the fastest growing segment in America today, people turning 62 years of age.
This product has not failed us, we have failed it.
Michael L. Banner is President of Professional Mortgage Alliance, LLC in Clearwater, Fla, and Founder of the American C.E. Institute, LLC. Together, the ultimate goal of both organizations is to educate consumers and financial professionals that today’s reverse mortgage is not just a needs-based product of last resort, but should be considered as a viable option in a comprehensive retirement plan.
Editor’s note: If you are interested in being a guest contributor to RMD, contact Jason Oliva at joliva(at)reversemortgagedaily.com