Former Skeptics, These Financial Planners Now Accept Reverse Mortgages

There have been many changes to the reverse mortgage program in the past few years, forcing financial planners who were once skeptical to now realize how these products can benefit their clients and, in certain cases, their own businesses.

There has been an overwhelming amount of positivity toward reverse mortgages, due in part to a combination of the recent improvements made to the program and from the media becoming more educated and painting reverse mortgages in a better light.

“We’ve seen a lot of streamlining and clarity from the reverse mortgage program,” says David Holland, certified financial planner and CEO of Holland Financial in Ormond Beach, Fla. “I wasn’t particularly keen on them at first and I used to always tell clients to be careful and only to use them [reverse mortgages] as a last resort.”


Holland has since changed his tune. There is a fairly large market for reverse mortgages in Florida, he explains, which is why earlier this year he launched Holland Mortgage Services, a licensed mortgage broker specializing exclusively in reverse mortgages. The new business line is setup as an independent broker, allowing Holland to work with any reverse mortgage lender that operates a wholesale channel.

“Since the launch in February, we have already closed four loans and have two more currently pending,” says Holland, who notes he is currently partnered with two reverse mortgage lenders.

With a more neutral outlook from before the changes were enacted, James Kinney, owner and certified financial planner at Financial Pathways in Bridgewater, N.J., explains that he was not completely against reverse mortgages before the new regulations were put into place, but thought the program needed to be regulated.

“I was somewhat favorably disposed before, if it was for the right person,” says Kinney. “But the changes have helped make reverse mortgages more sustainable and suitable for the people who are taking them out.”

Using a reverse mortgage as a safety net is how Kinney sees it. “My father uses one, my mother-in-law uses one and they have benefited greatly from them,” he says. “You just need to know exactly what you’re getting into.”

Slowly, but surely, reverse mortgages will become even more mainstream as the population ages and a growing share of older Americans find themselves looking for new ways to fund their longevity.

“We’re already beginning to see somewhat of a more balanced commentary from major news outlets,” Holland says.

About 93% of reverse mortgage media coverage was either positive or neutral in the second half of last year, according to data from the PR NewsWire monitoring service and the National Reverse Mortgage Lenders Association. Of the more than 5,000 news stories about reverse mortgages in the past year, only 4.2% conveyed a negative sentiment.

The protections will just keep improving upon themselves, Kinney shares. “The changes are very useful and have helped keep people from getting in over their heads,” he explains.

The one area that needs more of a focus is educating financial planners.

“If more finance professionals can learn the benefits of this product and how to use it correctly, we will see an increase in financial planners adding reverse mortgage origination to what they do,” Holland says.

Both Kinney and Holland can agree that with more education in the financial services industry, the more the reputation of reverse mortgages will start to change.

“The changes are not radical at all” explains Holland. “They’re just trying to answer as many concerns as possible to ensure everyone’s clear on what a reverse mortgage can and cannot do for them.”

Written by Alana Stramowski

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  • If the point is that financial advisers are changing their attitudes about the use of reverse mortgages in retirement plans anyone who doubts that simply needs to read articles on the subject per 2012 and post 2011.

    But this has been true for decades. Just look at Dennis Loxton for one. It has been a slow uphill fight; yet it continues. Some may think that the war to win over financial advisors has concluded. It has just started. We have come a long way but there is a long way to go. We do not want just theoretical acceptance but rather recommendation and origination. We are an industry not a think tank.

    What we do not need to do is sit on our laurels. Despite the optimism we hear about how the FHA changes since September 29, 2013 has improved HECMs, where are the higher endorsements? Imagine 49,500 endorsements for this fiscal year. It is far closer to reality than many want to accept.

  • Wow, we need as much as we can of this kind of publicity! This is a great article you put out Alana, especially to start out the Memorial Day weekend.

    I continually encourage loan officers to subscribe to the RMD and read it daily. Not only to gain knowledge and find out what is current in our industry but to save articles like this to use as a sale tool.

    Create a scrap book of articles like this so when you do call on a financial planner or adviser, you can show them what their own industry professionals are saying about our product. Not only that but it also shows your prospective financial planner how their colleagues are using the HECM in todays environment.

    The article should tell everyone reading it how much potential we have in the reverse mortgage arena. It is now a new ball game, our client base has expanded and has become a great deal more professional than ever!

    We all need to stay on top of all the changes occurring, we need to continually be updating our mental data base. We must also learn as much as we can about our new found expanded client base. We need to understand the financial planner and how they look at equity positioning of their clients needs and assets! This is so important for us to be successful in this new market of opportunities we face.

    I am not saying to forget about our traditional client base or our traditional methods of prospecting, on the contrary! I am just saying we all have the opportunity to expand our client base and get with the times!

    It is no different than calling on and dealing with small community banks and credit unions, you must understand their mindset and what motivates them. If you don’t, you will never get to first base with them. In fact, if you don’t get to learn and understand any of the professional client base sector I have been talking about, you have no chance of being successful with them!

    We are finally not known as only a means of last resort industry anymore! I would think this is something many of us have been longing for!!

    John A. Smaldone

    • John,

      I do not know how things are in the Smokies but I cannot affirm the following quotation here in the West: “We are finally not known as only a means of last resort industry anymore!”

      I think the same applies to much of most of the rest of the country. Why have a scrape book if the quotation is the case? It is no different with community banks and credit unions. Our little industry is still not generally known but if it is, it is generally known as an industry that provides a loan of last resort.

  • To write the following is more than bold: “There have been many changes to the reverse mortgage program in the past few years, forcing financial planners who were once skeptical to now realize how these products can benefit their clients….” The changes themselves do not “force” financial planners to “realize” anything, even those who were previously skeptical.

    There are hundreds of thousands of so called financial planners in this country. If the quotation were true, we would not be facing our worst fiscal year for endorsements in more than a decade. If it were true, we might even be having a shortage of calling center originators to take the massive number of applications this group could engender in a fiscal year by phone alone. Given time, we might see endorsements larger than today coming to us annually through referrals from this one single source.

    Product changes alone do not drive referrals. Positive changes in the attitude of referring sources about a product most definitely can. How do we go from changes to changed attitudes? Only by the referral source learning about the changes and how they positively apply to those the referral source has influence in making the relevant decision can their attitude change. It is a long way from product changes to any large number of skeptical financial planners realizing the potential benefits to their clients sufficiently to add reverse mortgages to their first option level they suggest to their mass affluent retired clients or those near retirement.

    For some financial planners who knew about Savers and recommended them, recent changes as a whole have had a negative influence in their thinking especially the way that the industry is attempting to sell them.

    • The_Cynic,

      It could even take more.

      While financial advisors might suggest HECMs here and there where they are near last resort AND the client is willing to hear the solution or where it is to their financial advantage to do so, many will not make such recommendations until a significant number of their clients come to them asking about the benefits of a reverse mortgage.

      Several financial advisors who accept the concept whom I have spoken to over the last three years, will not initiate any conversation with their clients until such time as they gain the sense that their clients will not bolt by even making the suggestion. The largest percentage of these individuals have their practices west of the Alleghenies and east of Sierra Nevada Mountains. There are vast regions of the country where any debt taken in retirement is to be loathed, especially anything which could ultimately result in the loss of the home. Yes, they recognize the children will sell their home upon their deaths but to them the home is THEIR castle, not to be messed with.

      Will their referral practices change? Not until the attitudes of their client base changes. So for now solely depending on a marketing emphasis with financial advisors will hardly raise our endorsement levels for several years. Perhaps what is needed is a marketing campaign that emphasizes the mass affluent with a strong education emphasis on financial advisors.

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