How Reverse Mortgage Marketing Must Speak to the ‘Forward’ Business

Generally, someone who is looking for a conventional mortgage is not necessarily interested in a reverse mortgage, but getting the information into the “forward” space is especially important to further educate the public as well as traditional loan officers about reverse mortgages, according to industry marketing experts.

The number one hurdle is still education, Tim Harder, vice president of business development at 1st Reverse Mortgage, said at the 2016 National Reverse Mortgage Lenders Association (NRMLA) 2016 Annual Meeting & Expo.

“The discussion today is about education for the forward mortgage loan officer,” Harder said. “A lot of them feel that this is the loan for, as they say, old people, or the loan of last resort.”

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A majority of forward loan officers believe that reverse mortgages are not an option as part of a holistic financial plan, said Harlan Accola, CRMP, national reverse mortgage director at Fairway Independent Mortgage Corporation.

“Some of them [forward loan officers] are out there telling clients not to get them,” Accola added. “That’s what I found out when I came to Fairway, that loan officers just didn’t know what they didn’t know and they would specifically advise against it.”

A vital marketing tool

In addition to educating those within the mortgage industry about reverse mortgages, another way lenders are breaking down barriers is by instead of looking at how to sell a reverse mortgage to someone who is interested in a forward mortgage, they are looking at the product more as a marketing tool, Harder explained.

“It’s not so much about the [reverse mortgage] loan right now, it’s more about using the reverse mortgage as a marketing tool to allow them to get in front of more real estate agents, more builders and more financial planners to promote all of the products they have,” he added.

Exposure is also a huge component to marketing the reverse mortgage product to the forward space, explained Ken Krajewski, managing director and head of reverse mortgage lending at The PrivateBank and Trust Company.

If a company is part of a bank that does do forward mortgages, getting to know the bank tellers can work to get the education out there about the product.

“Every bank should be some place we [reverse mortgage professionals] are approaching,” Krajewski said. “We talk to bank tellers a lot about those customers who are overdrawing their accounts—that’s a great opportunity to talk about reverse mortgages. When you see people coming in and cashing in their CDs, that’s another great opportunity to talk about the product.”

Talking to the bank tellers about when Social Security checks are sent out and stopping into a location on that day when people are cashing those checks is another great time to educate people about the reverse mortgage product, Krajewski adds.

Looking toward 2017

As we move into the new year, 1st Reverse Mortgage is taking the approach of sharing the reverse mortgage product as a “new offering” to the forward mortgage industry, where there are limited new products coming out.

“Unlike 2007 and 2008 when there was a plethora of new products out there, there really isn’t a ton of new products in the mortgage industry right now,” Harder said. “If refi volume drops down, the forward mortgage side of the business is going to wake up and a reverse mortgage could be seen as a new product for someone who has been avoiding us or shying away from the reverse product in the past.”

Just getting a business card out there from the reverse mortgage industry will stand out among all of the realtors and forward mortgage business cards, Krajewski explained.

“Nobody else has a reverse mortgage card,” he said. “You can talk to 100 realtors; they don’t know one reverse mortgage person. Try to be that one reverse mortgage person.”

The product does sound a little too good to be true, Krajewski adds. But while it is too good to be true, people should be getting out there and educating the public as well as all the other professionals who are valuable contacts for the reverse mortgage industry.

Written by Alana Stramowski

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  • The blog seems to assume that all real estate licensees are as productive as all others. There is no focused approach presented. In grooming Realtors as referral sources, one is best served by reaching out to the most productive salespeople (who represent the buyers) first and then the most productive listers. However, even the latter approach lacks the sales production punch most of us believe this product should be capable of.

    To make an explosion you need at least the following two elements: 1) the detonator and 2) the explosive. But sometimes the explosive is so inert that the fuse ignites an intermediary which creates the combustion that causes the main explosive to go off.

    Yet some explosives are so inert that igniting it does nothing. There is generally an intermediary step, the lesser explosion that ignites the full explosion.

    With builders, the two step sales process is far less effective than a three step process. If the builder buys into the potential for more total sales, the sales force will be driven to make reverse mortgage purchases. So with builders there is a reasonably effective way to close more sales in three steps, first the builder, then the sales force and finally the buyers.

    Yet there is but a two step process at the most when it comes to the homeowner to homeowner sales. This is why this type of reverse mortgage sale is less dominant than builder sales; however, homeowner to homeowner residential home sales are generally more common in all areas of the country than builder sales.

    How to most effectively go to the sales force (Realtors) who provide homeowners the easiest way to sell their homes to others at market prices will be open to debate for sometime. Yet this is where the reverse mortgage sales yield should be the greatest.

  • This move to do more forward business with an “old” person and reminding the borrower that an RM is too costly and a scary proposition ignores the issue of exhausted equity and the need for payments, doesn’t it? (Or am I wrong again?) Guess what? According to previous information placed here in RMD, “old age debt” is increasing. (RM business is decreasing, isn’t it?)

    • Warren,

      There is no question that you have bought into the notion that forward mortgage originators (FMOs) are fully engaged in competition to reverse mortgage originators (RMOs) even to the extent that they will distort facts about reverse mortgages. No doubt, some do exactly this but what about those FMOs whose desire to help seniors make an informed decision?

      By the way I have obtained the world’s smallest violin and am playing tunes of sympathy for your plight –“Or am I wrong again?” You are exactly right that senior debt is rising while HECM endorsements fell last year. But HECMs are not in free fall. Remember the damage done to HECM volume done by financial assessment?

  • The article addresses how we can best work with the traditional/forward mortgage world. To really have a working relationship with a traditional lending operation there is not much a reverse mortgage specialist can do to pay for a referral from them.

    However, the old one hand washes the other theory can work. You refer the reverse mortgage candidate to me, I will refer the traditional mortgage candidate to you!

    The traditional world deals with a great deal of home purchases and a lot of younger people with senior parents, which could be potential borrowers for a reverse mortgage, this is a good way for the traditional referral partner can work with the reverse mortgage specialist.

    Another great way is if a senior, 62 years of age or older could not qualify for the traditional loan due to a credit score issue but could with a reverse mortgage because of extenuating circumstances!

    If the traditional loan officer was working on a transaction with a realtor client and saved the deal by going the reverse mortgage rout, that traditional loan officer is a major hero in the eyes of that realtor!

    I realize there is more to this article than just working and speaking to the forward mortgage folks but this was the main topic.

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

  • A lot of negative comments below. The reverse mortgage program has saved my parents retirement.

    Myths:
    Expensive
    The bank owns the home
    Heirs won’t inherit anything

    We found comparison website, click quote save dot com, that found us a lender who charged $0 upfront fees (savings of $6k).
    There was no haggling involved just tell them you don’t want to pay any upfront fees.
    The title/ownership remains in my parents name and if home values increase I will inherit the remainder of the equity.

    My parents are saving $24k/yr by not having a mortgage payment, and I don’t have to worry about their financial situation. They don’t need my assistance, everyone wins.

    If home values decreases or they live for another 30 years I’m perfectly happy not inheriting any $ or the home. I just wanted them to have a comfortable retirement.

    Don’t believe all the negative comments without doing your research first. Like any other service and industry there are good lenders out there.

    Thank you all, and best of luck.

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