Reverse mortgages have grappled with their share of negative perceptions over the years, often times due to a generally widespread misunderstanding of these loans in terms of what they do and how they function.
Not only is greater education and outreach needed to enlighten the public about the potential benefits of reverse mortgages, but industry members say these are also vital components for attracting people to work in the reverse sector.
Education for both borrowers and professionals is the key to growing the reverse mortgage industry, says Wendy Peel, vice president of sales and marketing for ReverseVision.
“While advertising the product is essential, more money needs to be spent on educating everyone from borrowers, lending professionals, retirement planners, bank community relations departments and the media on the facts and benefits of these loans,” Peel tells RMD.
The average age of a mortgage originator is about 54-years-old, according to data from the Mortgage Bankers Association. On the reverse side, the average age is likely a “little north of there,” estimates Mike Crossett, executive vice president of The Federal Savings Bank.
“Both on the forward and reverse sides, we have some strategic paths we’re going down to bring fresh blood and fresh talent into this industry because the average age is creeping up,” Crossett says.
From a national loan production office in Chicago, The Federal Savings Bank originates both traditional forward mortgages as well as reverse mortgages. The company originated 143 Home Equity Conversion Mortgages (HECMs) year-to-date in May 2015, according to Reverse Market Insight’s HECM Originators May 2015 data. In May alone, the company did 17 loans.
The Bank is taking a multi-pronged approach in its efforts, which focus mainly on recruiting experienced forward mortgage originators—both younger and older—and training them on the nuances and technical aspects of reverse mortgages.
“There are originators who have been experienced on the forward side that are now hitting an age where they can connect better with seniors,” Crossett says. “And there is definitely, at times, a more cranial component involved to solve the HECM puzzle because there are more nuances to help a senior accomplish what they want in a Life Mortgage for Seniors [reverse mortgage].”
The company is also making a “big push,” in recruiting former military personnel, such as those at the junior military officer and retiring colonel levels—a strategy partly based on the ethics and values one acquires while serving in the armed forces, Crosset says.
“We can train people to be technical experts in HECMs, but we can’t train someone to be ethical and do the right thing every time in front of the customer,” he says.
In April, The Federal Savings Bank embarked on a new approach to reverse mortgage originations, now marketing the product as The Life Mortgage for Seniors. The rebrand will work toward educating financial planners and others on how a reverse mortgage can benefit their clients.
Piquing the interest of key retirement planning professionals such as financial advisers has been a hot topic in the reverse mortgage space, perhaps even more so in the wake of the Financial Assessment.
But while the financial planning community is starting to come around in acknowledging the strategic use of a reverse mortgage in retirement plans, there is still a lot more that the reverse mortgage industry can do to get these professionals “on board” with HECMs.
“I think the industry as a whole is trying to eat the elephant in one bite with this and the reality is, at the end of the day, people do business with people they like and trust,” says Crossett, who adds that financial planners will likely do business with organizations that are backed by “solid” companies—those that they know will provide “sound advice” to help their clients make the best decisions.
“It boils down to the boots-on-the-ground originators building relationships with financial planners,” he says. “That’s going to be what really changes the industry, but it’s hard.”
Such relationships have the potential to create a “lifetime of referrals,” Crossett says, but unfortunately there are no shortcuts to forming these bonds.
“You’ve got to go out and you’ve got to do it,” he says.
Written by Jason Oliva