Three Tips for Working with Today’s Reverse Mortgage Borrower

The work of a reverse mortgage originator has undoubtedly become more complex following the arrival of the Financial Assessment. As April fades further away in the rear-view mirror, originators are continuously tasked with refining their best habits for working with potential borrowers in today’s reverse mortgage environment.

While there is no tried-and-true approach to converting prospective applicants into reverse mortgage borrowers, there are several practices originators can employ in their ongoing efforts to best serve their senior clients.

1. Mind the “gap,” Curb the FA-talk


Financial Assessment is a term created by the Department of Housing and Urban Development (HUD) that, although it has become common tongue among professionals within the reverse mortgage industry, may mean nothing to prospective borrowers who have little knowledge of reverse mortgages.

Taking this knowledge gap into account, it is important for originators to not jump right into “FA-talk,” and instead first hear out the client as a means of better assessing where they fit under the new guidelines, suggests Ed O’Connor, reverse mortgage marketing and sales director at FirstBank.

“We have more evaluating to do, but from the initial conversation with the borrower, the main question should be: how can I help?” O’Connor says. “Once we figure out the borrower’s situation, we can then and only then, determine where they stand with FA.”

2. Do more by saying less

When sitting down with a potential borrower, originators may be able to accomplish more simply by saying less from the get-go.

Listening is the No. 1 rule of sales to seniors, says O’Connor, who notes that some originators may make the mistake of trying to sell themselves, their company or the product and spend the initial minutes of meeting with a borrower talking non-stop.

“If you would simply let the borrower tell you their story, you will probably find out about 85% of what you need to know, including some details about FA,” he says.

When a borrower says they always struggle to pay their property taxes, it might not make sense to immediately go into a lengthy explanation about life-time set-asides or other FA rules without hearing what other issues they might have.

“If you let them [borrowers] tell you, you would now have the answer to their financial difficulties,” O’Connor says.

3. Set expectations upfront

Granted the Financial Assessment requires more work on behalf of originators from an evaluation standpoint, it also demands more effort from potential borrowers to gather all of the necessary documentation needed to determine their eligibility for getting a reverse mortgage.

Setting expectations at the point of application can be a good way to let borrowers know what will be required of them, both in terms of the documentation and level of information they will need to provide, suggests Rob Balmer, regional senior vice president of the HECM National Division at The Federal Savings Bank.

“With Financial Assessment, we are finding the best loan officers are doing a great job of setting expectations with the borrower and asking for all anticipated documents at application,” Balmer says. “This ensures we exceed customer expectations from the beginning, and creates a smooth process for all parties.”

Written by Jason Oliva

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  • Ed makes a lot of interesting and at times incorrect statements in the quotes above. For example, he discusses a FHA rule he calls life-time set asides but there is no such thing. These set asides bear the name life expectancy set asides (LESAs) for a reason. LESAs do not last a lifetime but are intended to last the life expectancy of the borrower which are very different. With a LESA, generally if HECM borrowers outlive their TALC life expectancy they had at initial funding, any monies available in a LESA they might have had will have run out meaning that there are no longer any funds to pay out to the borrower in the case of a partially funded LESA or to pay Property Charges directly in the case of a fully funded LESA.

    Ed’s mandate of “‘once we figure out the borrower’s situation, we can then and only then, determine where they stand with FA'” is more appropriate to prior years. Today more and more HECM prospects come from referrals, not mail campaigns, social media, TV ads, newspaper ads, senior related magazine ads, or other media sources. Today many of the referrals come from financial advisers whom we have met with already and have a financial plan in mind which incorporates a HECM. Getting involved with the senior about that financial plan could create a rift with the financial adviser.

    Also where seniors are coming through the referral of a Realtor or builder to find the funds for the purchase of a home, how much time should be wasted at first on finding out what they want the funds for? That should come during the period we discuss what type of HECM they want. So while the mandate is still appropriate in most cases today, we all hope that as time marches on it will more likely become less and less appropriate.

    As Ed correctly points out, listening is key in sales. Despite industry propaganda we do not have to be great educators but we should be superb listeners.

    Like Rob points out above, “‘both in terms of the documentation and level of information they will need to provide'” there is the need to set expectations very early in the origination process. As Brent Calver points out in a comment today over at HECM World, the prospect needs to hear the words “if you qualify” about three times in the early part of origination so that expectations are correctly set for what follows.

  • “Great Article” I appreciate Ed’s 3 pointers and concur with his assesssment of what is important for us loan officers who are out on the street.
    Please keep your articles coming, greatly appreciated

    John Walters

    • While I do not know if it is Ed or Jason, John is addressing in his last paragraph, I think we all appreciate how Jason’s articles are getting better with time.

      Jason Oliva, the person responsible for the article, as John says : “Please keep your articles coming….” They are greatly appreciated.

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