Reverse Mortgages in Growing 55+ Housing Market, Realtor Education is Key

While the reverse mortgage for purchase product has seen only moderate success at best since its January 2009 launch, one Florida reverse mortgage company is seeing growing interest in the product, and is taking a somewhat alternative approach to marketing the loans: Working to educate Realtors.

Mike Banner, founder of Clearwater, Fl.-based LoanWell America and, more recently, American C.E. Institute, launched a class for Realtors nine months ago, and says the response for his business is twofold.

“The great majority of Realtors don’t know this product exists,” Banner says. “It’s about educating a lot of people on the traditional reverse and the HECM Purchase. Lots of my classes have Realtors who are themselves 62, so we are getting purchase business and traditional business.”

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Banner says the Realtors who can help identify HECM for Purchase borrowers are also providing a good deal of referral business for family members, friends, or themselves.

The course has worked with about 600 Realtors in Florida, from classes of as few as 10 attendees to as many as 100. The Realtors receive continuing eduction credit for the three-hour course, which launched as a free class, and now costs $29.99 to attend.

Upon the financial crisis in 2008 and 2009, Banner saw business decline, and his company shrank from 40 employees down to four. “Business has never been so bad,” he says. Lacking excitement for a return to the Realtor world where he had done business in the past, he opted to spend the time and effort creating the class and getting it approved with the state of Florida. “I was excited about rebuilding my company,” he says.

While it was a time-consuming process, Banner ultimately gained approval from Florida’s Department of Professional Regulation, which controls real estate and mortgage licenses, among other duties. The first reaction, he says, was negative. “They said, ‘I don’t like reverse mortgages and you can’t do them for purchase.'”

Within six months, however, the department came around and approved the course, after reading up on reverse mortgages and better understanding the Purchase product.

Another reverse mortgage company in expansion mode has also seen growing success with the HECM for Purchase, and notes that a different marketing approach is necessary in catering to this new population.

“It offers the ability for a senior to downsize,” says Dan Harder, vice president of 1st Reverse Mortgage USA. “We had a record month of HECM for purchase, with huge, huge opportunities that forward loan officers see. In order to be successful, you have to go to forward loan originators, because reverse originators have never worked with Realtors before.”

The latest data from the Department of Housing and Urban Development shows 1,349 HECM for Purchase loans were made in fiscal year 2010. Current monthly totals this year are in the range of 125 to 130 loans.

A study released in January by the National Association of Home Builders and the MetLife Mature Market Institute shows the 55+ market is growing, with a large portion of seniors who will be seeking new housing. Those may be likely HECM for Purchase buyers. “By the year 2020, as baby boomers move into this age bracket, almost 45% of all U.S. households will include someone at least 55 years old,” said David Crowe, NAHB’s chief economist, at the time of the study. “The number of those households seeking housing better suited to their changing needs will therefore rise dramatically.”

Banner has seen the HECM for Purchase as most fitting for retirees who wish to move to Florida for retirement, and still keep some money in the bank. The borrowers are younger than the traditional borrower, in Banner’s experience, in the span of 62 to 65 years old.

Before starting the Realtor course, he had done a single HECM for Purchase. Since, he has done 10, plus has gained referral business from the classes.

“It’s put me back in growth mode,” says Banner, who has begun recruiting again and has made two recent hires. “Realtors are welcoming me after i get over the first obstacle.”

In a market where thinking outside the box may be a viable tactic, Banner has showed a where bridging the gap between a product and its potential borrowing population has led to growth and brand recognition.

“I can’t say it’s a quick process,” Banner says. “But I can say from every seminar I’ve given, I’ve received business within 30 days.”

Written by Elizabeth Ecker

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  • The realtor concept is not a new one to Michael Banner.  It is one we have disagreed on for quite awhile.  We still do. 
     
    But Michael has taken his hunch from little more than a vague dream into a course now approved by the state of Florida for CPE for realtors.  He has taken it from a free course that cost him time and money into a growing profit center.  He never complained about or even mentioned the resistance he encountered from state officials.  Michael just worked through it until he got past the objections and obstacles.  This is not the first time Michael has done this.
     
    When Michael says he has found a new niche, there is little question he has found it.  While it is unclear if his success can be replicated outside of Florida, Arizona, or other states into which seniors are most likely to move, there is little question if someone can find the way to do it Michael will.  In areas where we wholeheartedly agree, he has created other CPE courses and is now in the process of expanding them into other states and media.
     
    One of the big drawbacks of HECMs for Purchase program is its lack of stability.  Over the last several years, HUD and its HOCs have been adjusting the program.  Originators have found that what were not conditions a month or two ago are suddenly conditions.  This is one of the problematic issues writers of course materials find in certain fields. 
     
    The CPE model is a great one.  It establishes the speaker as an authority with professionals.  For the right individuals it can make marketing activities themselves profitable.  For those who are looking to work with financial and legal advisors, this technique can save hundreds of hours of time in traveling, waiting, and meetings.  It will mean that you will not be rushed trying to get your points across.  However, if meeting with professionals is not your cup of tea, this method will only intensify your discomfort.  It also requires follow up but with people you have taught.

    • Marty,

      Yeah, as a California licensed real estate broker who refuses to become a Realtor, you are so right.  Those real estate licensees who pay “club dues” to be called a “Realtor” are not the brightest in the industry (LOL).

      Michael provides something the realtors have to get anyway.  He does not seek them out to give him deals.  His is a much softer approach that has less barriers and defensive mechanisms to overcome.  They pay to hear him “market” them.  That is cool — very, very cool.  It is a great marketing approach.  People always seem to retain a little more when they have some “skin” in the game. 

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