Reverse Mortgage Acceptance Depends on National Education Efforts

Educating financial advisers, realtors and other non-industry professionals serving senior clientele will ultimately thrust reverse mortgages further into the public consciousness. Getting to the point when acceptance turns into more loan closings stands to be a slow grind.

Any reverse mortgage industry professional with an internet connection has noticed firsthand the changing tune of reverse mortgages covered in the mainstream press. While not all news has necessarily been bad news over the past few years, the sentiment has invariably focused on new borrower protections as well as an enlightened perspective on reverse mortgages, particularly when it comes to their place in the retirement planning puzzle.

New program changes, while intended to make reverse mortgages safe products for borrowers and their non-borrowing spouses, have had an adverse effect on industry volumes, albeit unintentionally.

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Thus far through April 2016, industry endorsements are roughly 8% lower compared to last year, even as the one-year anniversary of the Financial Assessment fades into the rearview mirror. But even with April volume down 6.4% from March, the jury is still out on how endorsements will shake out in the coming months.

So while new borrower protections, positive press and a flurry of financial planning research have not yet translated into a greater acceptance of reverse mortgages, industry members hold out hope that the key to adoption lies in education.

In efforts to bridge the reverse mortgage industry with other senior-clientele focused professionals, two weeks ago the National Reverse Mortgage Lenders Association hosted its first-ever Education Week. The initiative, which consisted of four educational webinars on reverse mortgages, reached over 1,300 professionals, including financial advisers, mortgage bankers, real estate agents, caregivers, estate planners, among other pros who work with older adults.

Webinar sessions taught mortgage bankers about the most recent developments in the HECM program; showed caregivers and health care workers how to fund the costs of aging using home equity; and more broadly, showcased how a reverse mortgage can help seniors effectively plan for retirement.

The accessibility of the internet provides a broad soapbox for the reverse mortgage industry to educate a wide audience about the benefits of the HECM product.

Seminars and in-person educational events might be effective in reaching professionals and prospective borrowers living in a given area, but if the reverse mortgage industry wants to move the needle on volume, education efforts need to be a national focus—one that’s more than just one week of the year.

Written by Jason Oliva

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  • A well thought out opinion piece but one I disagree with.

    As to “the jury is still out on how endorsements will shake out in the coming months,” there is enough information in the public domain already released by HUD to indicate that total endorsements for May and June combined will not total 9,000 and a high likelihood they will be less than 8,500 endorsements. In about two weeks we should have a good idea of how endorsements will be in July. A month later we should know the endorsement picture for August.

    HUD has at their disposal the data needed to make those predictions right now but based on their disciplined approach to releasing this kind of information the needed data [Case Number Assignments (CNAs) for March and April] will be posted in stages in approximately two weeks (March’s CNAs) and then in about seven weeks (April’s CNAs).

    The opinion goes on to say: “New program changes, while intended to make reverse mortgages safe products for borrowers and their non-borrowing spouses, have had an adverse effect on industry volumes, albeit unintentionally.”

    Who did not realize from the beginning that the changes on September 30, 2013 would result in fewer endorsements?
    On September 30, 2013, HUD took the second step in stopping the bleeding in the MMI Fund. The first step was on March 31, 2013 in eliminating fixed rate Standards. The second step was on September 30, 2013 in eliminating not only adjustable rate Standards but all Savers as well.

    As to financial assessment, RMD surveys leading up to the implementation date (4/27/2015) of financial assessment showed the industry was anticipating a huge loss in business due to financial assessment.

    But who says that the changes on August 4, 2014 were not boosts to our dwindling endorsement production?

    Right now there is no empirical evidence that the changes of September 30, 2013 and April 27, 2015 did not drag down HECM production and those of August 4, 2014 did not increase endorsement production slightly but not so significantly as to substantially offset the endorsement losses from the changes of September 30, 2013 and April 25, 2015?

    On this the author and I agree. If all NRMLA will be doing is an education week once a year, its fruit will be skimpy. If education week showcases our CRMPs, great but it needs to be at least quarterly to be effective.

  • Recently I read that the future of the industry is bright as if there was no rough roads ahead. Where do people get their conclusions from?

    Jason correctly states: “Getting to the point when acceptance turns into more loan closings stands to be a slow grind.” A slow grind and a bright future are very different.

    When I hear bright future at this time, I want to start singing: “Somewhere over the rainbow….”

    Let’s all go into another weekend singing sweet ditties with no substance.

  • Government continues to tighten the noose on the reverse mortgages industry. They are in charge, not education or loan officers who may be the only ones left who believe in the need for this product. This industry is more like the coal industry than they think. This talk is just more smoke to screen out encroaching government regulation.

    • Warren,

      This is not the coal industry but it has been an industry needing reform after the losses incurred by the MMI Fund. If the changes had been made a few years before, the need for such harsh corrections over the last two plus years would have been much less.

      If the cumulative loss of the HECM portion of the MMI Fund can turn around perhaps principal limit factors can be raised and ongoing MIP on new HECMs can be lowered. It is because of the fixed rate Standard fiasco that some form of first year disbursements will remain with us for years.

      Unfortunately, financial assessment is the direct result of the rise in the defaults on taxes and insurance. It and its LESAs need to be toned down but again any changes are most likely several years away.

      The damage caused by the Great Housing Depression will be with us psychologically for years. If we can get through that, perhaps HUD will pull back from what currently seems like draconian changes.

      It is time to push for reductions in changes, not pessimism.

  • Jason brings to light what I think we all know down deep, education, education and education! This is needed on a wide spectrum more today than ever.

    Yes, like Jason stated, we need more national campaigns being conducted but who is going to do it? Lenders and other players in our market need to ban together, even if it is with NRMLA. They need to pool their recourses and put it into national educational workshops. Not only for the professional industry but for the public as well.

    I find in my travels and conversations that many companies out there today are putting less emphasis on rigid training program for their staff, this must change, drastically!

    If we want to push the volume of endorsements up, we then need to start making more noise. We need to start pouring on the education to the public, nationally. We have more going for us today than ever before. More seniors entering into the market place, more equity in the homes owned by seniors, more credibility on the part of our product and more players accepting the HECM as a true retirement planning tool!

    Everyone needs to start pouring on the educational process to the public, in a big way, we will then see endorsements climb!

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      Your points are well taken but education alone will not propel us into the same kind of exaggerated growth that started in this industry a decade ago. While education is needed so is training but there also needs to be advanced training by marketing focus from those who are experts in those fields, not necessarily ours.

      While the reaction from personal financial academicians has been tremendous, it is just a milestone. For example, looking at the most recent HUD HECM production reports, the percentage of borrowers under 70 is going down from the same period a year ago — not up as claimed five years ago. In 2011 there was a (false) claim made that borrowers were getting inordinately younger that year and as a result HECMs would be more attractive to financial advisors. With all of the emphasis that has been given by the industry to gaining financial advisor referrals, why are we seeing a drop in the key age range of the expected referrals (based on arguments made in 2011)?

      We are being told through HUD supplied data that our endorsement numbers for this time of year are the worst they have been in more than a decade. Yet has the industry abandoned education? With the loss of Wells Fargo, the trainer of the industry, basic HECM training still has a huge hole to fill but the call to educate has never been stronger. Yet how can one educate without adequate and sufficient training?

      So make the cries for more education and more training, but perhaps what is also needed is better marketing.

    • John,

      I agree… education is so important to the Loan Officers success and the industries best hope for widespread acceptance and
      growth.

      I began my Reverse Mortgage education with the training platform Reverse Focus created, Reverse Basics. I don’t know that I could have been successful in my position without the educational
      foundation it provided. Regardless of whether your company offers training or you use a product like ours, educate yourself. It’s well worth the time spent.

      I wholeheartedly agree with your desire
      to see more National Campaigns too, especially campaigns designed to educate the Professional community. I have the benefit of speaking with
      LO’s around the country every day. I often hear fantastic stories of success and lives changed by the Reverse Mortgage. I encourage our clients, and the Reverse Mortgage community, to reach out to your local Financial Advisors, Attorneys, Realtors, etc. and share these successes.

      I am presently working with several clients to develop Educational Drip Campaigns, using their Sales Engine accounts. I believe that continually providing educational and informative stories to these professionals is the key. Seminars are valuable, important, and necessary, but will they remember the Reverse Mortgage solution they learned a few months back when their client is in need? Maybe. I do believe they’ll see the value and remember the great stories shared with them through this drip effort. A story is often easier to understand and recall than facts. Wish us luck. Our success is good for the whole community!

      I appreciate you reading my comments. Reach out anytime.

      Sincerely,
      Elissa Shaner
      Reverse Focus

      • Elissa,

        I appreciate your comment very much and reading mine as well. Your comment also brings home many of my points as well as great ones of yours.

        There can never be to much education given or learned by all of us!

        John

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