Frequent Training Helps Originators Avoid Reverse Mortgage Sales Myths

Reverse mortgages are often misunderstood by the general public. As the industry strives to distance the reverse mortgage product from the “loan of last resort” reputation, ongoing education is critical not only for prospective borrowers, but also for the originators who work with them.

Over the years, reverse mortgages have suffered from a negative reputation fueled largely by widespread misinformation about the product. But there may also be some misconceptions being passed along to borrowers by originators.

A misinformed reverse mortgage borrower is one thing, but if the sales force also misunderstands the product it is selling, that is where problems can arise, says Shannon Hicks, president of Reverse Focus.


“The misconceptions don’t just reside in the minds of borrowers, but unfortunately they also reside in the minds of some loan originators,” says Hicks.

One misunderstanding, he says, relates to Federal Housing Administration (FHA) insurance and who is protected by it.

“I’ve heard that originators explain it as insurance that protects the consumer, and I think much of that is rooted in trying to build value for why [the borrower] is paying the FHA insurance premium,” Hicks says.

While FHA insurance does protect against losses, the protection is not aimed at the borrowers, but rather at lenders, “to encourage and increase the involvement of mortgagees and participants in the mortgage markets in making and servicing of Home Equity Conversion Mortgages for elderly homeowners,” as it states in the statute detailing the purpose of the HECM program.

Among its service offerings, Reverse Focus provides an online e-learning system for educating and training reverse mortgage professionals. When it comes to training originators, another misconception Hicks has run into involves the line of credit disbursement option, particularly regarding inaccuracies that the credit line always grows and lowers the outstanding loan amount.

“Even though we call it credit line growth, it’s really a growth rate applied to the principal limit,” Hick says. “

It may not just be originators new to the reverse space who are guilty of misunderstanding the product, but could also be those who have operated in the industry for a few years.

“Whether someone has been in the industry for three months or three years, those loan originators need to have coaching to make sure they’re getting better at their sales, improving conversions and not missing opportunities,” says Paul Fiore, executive vice president of retail lending at American Advisors Group (AAG).

Anybody AAG hires, regardless of whether they have reverse mortgage experience or not, must endure a three-week training program prior to hitting the sales floor, Fiore says.

The training includes one week of “reverse mortgage 101”, a week of sales and technology training and one week of “dialer” training for anyone who works in an AAG call center. Throughout that process, Fiore says originators in training are tested to ensure that they properly represent the product and can intelligently explain what a reverse mortgage is to clients.

In addition to on-boarding training, AAG also offers continuing education throughout the company. This includes hour-long one-on-one training sessions each week with sales representatives who are on the phone to make sure they are not saying anything inappropriate or incorrect about the product, Fiore says.

AAG also holds general sessions twice a week, where trainers will meet with the company’s sales teams to talk about potential areas of improvement and new product enhancement.

“Whether on the phone or on the ‘street,’ it’s important to understand a person’s knowledge-base of the product,” Fiore says. “If they have little knowledge and misconceptions, they may actually think it’s a loan of last resort. The only way to overcome that is to have an intelligent conversation about what a reverse mortgage can actually accomplish for people.”

Written by Jason Oliva

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  • Notice by what they emphasize, Paul is concerned about knowledge that increases sales while Shannon is interested in misinformation which harms the image of what a reverse mortgage actually is.

  • Jason,

    It would be interesting to see a survey of both salespeople and counselors regarding the myths of HECMs. See what myths each perpetuate and which ones that they are able to dispel. Putting something like that here on would be a very valuable service. I am sure that even some of us who have been doing this for close to a decade have some minor tweaks that we could make.

    Frank J. Kautz, II
    Staff Attorney

    Community Service Network, Inc.
    52 Broadway
    Stoneham, MA 02180
    (781) 438-1977
    (781) 438-6037 fax
    [email protected]

  • Would you expect a car dealer to make sure you know how a combustion engine works before you buy a car?

    1. Since the growth of the Principal Limit, in effect, gives the borrower access to more cash over time through the Line of Credit, is it really misleading to express it that way?

    2. Since the FHA insurance makes the HECM’S marketable, doesn’t that protect the borrower from relying on one institution’s solvency for the continued payments from the HECM contract?

    Of course loan originators should know about the HECM loans, but just because they state the benefits to the borrowers in terms that show what they can expect from the contract, doesn’t mean they don’t know the details.

  • This was a great article written by Jason Oliva and the interview with Shannon Hicks was fantastic! I know Shannon well and he was so on target, even I could not have said it better:)

    Shannon pointed out many good thongs in this interview, such as the FHA insurance. Shannon was so right when he said that many LO’s push the FHA MIP as a benefit mainly for the borrow.

    Sure, the FHA MIP benefits the borrower in many ways, especially if their money is siting in a line of credit or in the form of “Tenure
    Payments”. But the MIP insures the lender primarily. If not for the FHA MIP, the HECM would not be alive today for the borrower to take advantage of.

    Because of what I just said about the FHA MIP benefits more for the lender, indirectly inures that benefit through to the borrower. In short, it is a great win, win situation for all and that is how it should be explained by the LO!

    Also, I want to comment about Reverse Focus’s online e-learning system for educating and training reverse mortgage professionals. It is great, I took it myself and incorporated into a training tool for many cowponies I have consulted for.

    In closing, I once again want to compliment the author of this article and Shannon Hicks!

    John A. Smaldone

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