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