Many originators work largely through referrals in building their reverse mortgage business, with traditional sources such as financial and real estate professionals being the tried-and-true referral relationships. Another type of referral may be catching on for some, as a natural fit with reverse mortgages: In home health care for older people.
Some say they are starting to see some traction in working together with the growing industry, but the relationship, is a sensitive one.
“[Home care providers] look at us as an answer to when their clients run out of money for their care provider services,” says Jack Bauer, branch manager with Security One Lending. “We do a reverse mortgage so their clients have money to continue the health care services and stay in their own homes. It is a great partnership.”
In-home care, a booming industry that has seen growth recently due to the rising costs of assisted living communities and other alternatives for facilities that provide care to seniors, has proven a worthwhile relationship for some originators.
A 2011 survey of Medicare-certified home health agencies in the U.S. by the National Association for Home Care and Hospice counted 11,633 nationwide, with 2,447 home health agencies in Texas, 1,464 in Florida and 1,015 in California alone. And the industry is one of the fastest growing health care segments according to 2010 U.S. Census data.
Originators are seeing the need to tap into this emerging market as it lends itself to the same needs of those whom a reverse mortgage can benefit. Beth Paterson, executive vice president of Reverse Mortgages SIDAC, says she has worked with in home care providers over the years and has several recent clients who have been referrals from home care companies.
“The borrowers are using the reverse mortgage to pay for the home care so they can stay in their home and not have to go to the nursing home,” Paterson says. “Staying in the home and using the reverse mortgage is less expensive than selling and moving into assisted living—the dollars go much further.”
Paterson provides informational articles to home care providers that they can use with their clients. Working with the companies that provide the care is not necessarily easy, however, she finds. There is still an important education component to working with the care providers.
“The home care companies run into the same resistance we do when they suggest the reverse mortgage,” she says. Due to this resistance, she works with the providers on how to explain and overcome any objections to a reverse mortgage, without selling the product. Bauer has seen success in working with home care providers in his area. He and his team network through their local Chamber of Commerce health-related events in order to meet local providers in their area.
Currently, they are working with a provider in nearby Tucson, to which they provide reverse mortgage information that goes out to home care clients via the providers. But the referral relationship needs to be like any other, says Alain Valles, president and founder of Direct Finance Corp.
“It’s case by case,” Valles says. “There’s no magic solution or distribution channel. All of my business comes from referrals. Some are home care providers, but I don’t target home care providers. The last thing we want to be doing is holding seminars to home care companies. At some point that will cross the line and backfire on us.” But originators continue to see the relationship as valuable for seniors who can stop making mortgage payments or receive income to pay for in-home care services.
“If [the home care] clients do the reverse mortgage, they have funds to pay for the home care so it’s a benefit to everyone,” Paterson says.
Written by Elizabeth Ecker