Reverse mortgages are a “people” business. As HECM loan originators, closing loans not only requires certain social skills to build rapport with prospective borrowers, but a personal drive to successfully serve more than 1,000 seniors with reverse mortgages.
It also requires patience, says Len Ricci, a reverse mortgage originator with Iselin, N.J.-based Homebridge Financial Services. Ricci, who has been originating HECMs for the past 26 years—about the entire length of the HECM program’s existence—recently celebrated a personal milestone: closing over 1,000 HECM loans.
RMD recently caught up with Mr. Ricci to congratulate him on the accomplishment and learn more about the road to 1,000 closed HECMs, the challenges faced along the way, skills every reverse mortgage originator needs and what brought him to the HECM product in the first place.
RMD: How long have you been focused in the reverse mortgage industry and what attracted you to the sector in the first place?
Len Ricci: I closed my very first reverse mortgage when I was with Interchange Bank back in 1990, so I’ve been originating them for a pretty long time.
The HECM program was in its early stages back then. It worked similar to a lottery pool, where you put your name in and FHA would pick lenders from every state to participate in the program.
Interchange Bank had an interest in the program for a number of reasons. For one, in Bergen County [N.J., where the bank operated], property taxes were always high, and for seniors this was their biggest nemesis, forcing some to leave the area. So HECMs became a tool for Interchange to say, ‘We’re losing clients out of the back door, wouldn’t it be great if we had a program for aging in place?”
My ability to get to 1,000 transactions was also due, in part, to Homebridge. When I joined them 14 years ago, the company had the vision and foresight to realize the benefits that the HECM program brings to the senior community. They created a HECM platform and allowed it to flourish, and that allowed me to make this milestone.
Those were really the ingredients of starting out in the reverse mortgage business. I was still doing regular loans at the time, but closing reverse mortgages as well. I didn’t really jettison the forward piece of business until I came to Homebridge in 2002.
RMD: What are some of the biggest challenges you have encountered throughout your 26-years of experience in the reverse mortgage industry?
LR: The challenges of years ago remain the same challenges today. Mostly, the biggest challenges are dispelling the myths and misconceptions of the HECM program—they continue to percolate. The same misunderstandings that were out there 26 years ago are still out there today.
Many people still think their home has to be free and clear of debt or any other obligations in order to become eligible for the program. People still believe the proceeds received from a reverse mortgage are a taxable event, and there are others who still believe that there are restrictions on what they can use the proceeds for.
Some other myths include the notion that only poor people are the ones who pursue reverse mortgages. That’s obviously no longer the case. With the Financial Assessment, we’re on a different platform on a go-forward basis.
The number one myth is many potential borrowers believe that when you do a reverse mortgage the lender ends up taking an ownership stake in the property. That is the biggest misconception of them all.
I spend a lot of time explaining these things with folks.
The bulk of the FHA changes for many years were minimal changes to the HECM program. If you take a look at the last three years—or even last 18 months—there were probably more changes than in the prior 15-20 years of the program. But I think now we might be at the point where it will be quiet for a while.
Compared to 26 years ago, the public awareness of reverse mortgages is also much better now than it has ever been. I think that’s largely due to the articles out there in the print media and infomercials on TV.
RMD: Closing over 1,000 HECMs is quite the achievement. If this was the Academy Awards and you had to give an acceptance speech, to whom would you attribute your success in reaching this milestone?
LR: First and foremost, it’s about educating the public about the HECM program and the benefits it can provide to the individual. Also, the concept of aging in place has never been more relevant than it is today.
Whether you are 62-, 72- or 82-years-old, the reality is that the overwhelming majority of folks would rather remain in their own home as they age. A reverse mortgage can be the stepping stone to aging in place.
If you look at the demographics of the aging population, my understanding is that 10,000 Baby Boomers turn age 65 every day in this country, and that will continue for the next 10 years or so.
Not everyone is an ideal candidate for a reverse mortgage, but there is probably a majority of the aging population who may or may not have planned appropriately for retirement and are going to find themselves falling short.
The numbers suggest that long-term viability of the HECM program is great.
RMD: How would you complete the sentence, “The road to 1,000 HECM closings is paved with…”
LR: …many twists and turns. And challenges, too. The good news is there are many happy and content customers included in those travels.
RMD: What are the most important skills that every HECM loan originator needs to have as they meet with seniors?
LR: Patience, patience, patience. I’m say that three times because that is an integral piece to dealing with clients. Many seniors don’t make decisions very rapidly; they ponder it over. You need patience so seniors do not feel like they are being rushed into a decision they are not ready for.
My first job out of college was working with the Social Security Administration taking retirement claims. That was a good training ground for me in working with an older clientele because dealing with seniors is different than dealing with other groups of folks. My work at the SSA served me well.
Compassion for seniors, fortitude and good listening skills are other essential pieces. Having some piece of a social worker embedded in the back of your mind is also a key ingredient.
If a senior is comfortable, they will open up. That’s valuable because you can learn what is driving them, learn their needs and wants, and how you can structure a HECM in a way that makes the most sense for them.
For me, a HECM is a kitchen table loan. I’m a stickler for taking an application in-person, as well as going to the closing and being there for the entire process from beginning to end. I think the only two times I’ve missed closings were when my kids were born.
I have clients who have called me years, even decades later and kept in touch. From the overwhelming majority of folks I’ve received scores of letters, cards and handwritten notes as thanks for helping clients through a reverse mortgage. That is the rewarding piece at the end of the road for me.
Written by Jason Oliva