Counselors See Changes in Motives of Reverse Mortgage Borrowers

As reverse mortgage counselors adapt to shifting levels of volume since the October rule changes, they are also adjusting to the types of borrowers seeking counseling.

For the first two to three months after the lower principal limit factors took effect, Cambridge Credit Counseling Corp. saw more needs-based inquiries nationwide, but that is changing, said Justin Lally, reverse mortgage counseling supervisor.

“We are seeing an increase in those potential borrowers applying for a reverse mortgage as a way to supplement their overall retirement plan,” he said.


At the nationwide counseling organization Navicore Solutions, Rich Verrillo, the senior housing partnerships manager, said he is seeing the same mix of needs-based borrowers versus wealthier borrowers since October. Of needs-based borrowers, fewer want a reverse mortgage to pay off an existing mortgage, Verrillo said.

“The profile of the borrower really hasn’t changed, but most of the borrowers we are seeing either have no mortgage or a low existing mortgage,” he said.

In upstate New York, counselors also are seeing the same volume of needs-based borrowers. Colden Ray, a homeownership counselor at Belmont Housing Resources in western New York, said the only change she and colleagues have noticed is fewer borrowers looking for a mortgage payoff.

“I think at this point we’re seeing the same kind of demographics,” she said. “Honestly, it’s probably a pretty similar mix of higher income and lower income.”

Martin Rubin, a senior reverse mortgage counselor at Consolidated Credit Solutions in Ft. Lauderdale, Fla., which counsels borrowers nationwide, echoed Ray.

“I don’t really see that much of a difference in who is coming in,” Rubin said. “I’m still seeing people who need to pay off a loan, have small loans that need to be repaid, or people looking for an additional cushion.”

Lally added that he also is noticing an increase in better-informed borrowers, making the whole process easier.

“We’re able to focus more on the smaller details of the program and spend more time discussing loan comparisons and other calculations,” Lally said.

While needs-based borrowers still consider reverse mortgages, fewer open one after running the numbers since the principal limit and mortgage insurance premium changes, Ray said about her western New York market.

“They are just not able to get out of it what they were hoping,” Ray said. “It’s not, for a lot of folks, as helpful because it’s not giving them the cushion they want or the emergency help they need right now. It just doesn’t make as much financial sense for them.”

Written by Maggie Callahan

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  • There is little consistency and thus little guidance from counselors as to exactly what they are seeing. Somehow it would seem this kind of touchy feely content could be better organized. Counseling could gather such data and such data would be helpful to originators and counselors alike.

  • There is no doubt about it, the senior borrower of today is different from what we have seen in the past.

    Since FA went into effect in April of 2015 and since October 2nd of 2017, we are in a completely different environment. We must set are sights differently than we did, more equity in homes are needed because of the PLF’s, individuals have to qualify today from an income and credibility standpoint.

    This is why I feel the professional sector, the businesses that deal primarily with seniors are a major market for us. They attract the more affluent, those that have an easier time qualifying.

    Don’t take what I just said the wrong way, we still need to help all those that we can. However, we have to face reality as well, we have different criteria’s to go by today!

    What my friend Jim Veale said in his comment is very true. The counselors need a great deal more education on the changes that have occurred, this is where HUD comes into play, they need to require updated educational courses and exams for these counselors!

    Banks, Mortgage bankers, mortgage brokers all need to have required training for their LO’s on all the changes, you can’t just assume every loan originator is informed as well as they should be!

    And yes, senior homeowners seeking a reverse mortgage are more informed than the senior borrower of the past. This is exactly why we need to be more informed and educated than ever before.

    We have great opportunities out there. We have more equity in the hands of senior homeowners than ever before! We need to seek out those that have 60 to 70% equity in there homes, depending on age and circumstances. That is my two cents worth again for today!

    John A. Smaldone

    • John,

      In case there is any misunderstanding, I do not agree that counselors should be expected to understand the first thing about a reverse mortgage strategy recommended by a financial adviser or not.

      A counselor should clearly state that based on their requirements, they cannot comment on any strategy that the borrower may be relying upon or are curious about. If the prospect has questions on the advisability of the strategy, the counselor should be permitted to say that the prospect should seek advice from those whose practices are regulated and overseen by a state government agency which basically includes ONLY attorneys and CPAs. This would specifically exclude those who are CFPs and RIAs and are not also either attorneys or CPAs. (For clarity purposes, for a number of years now I have only been an inactive CPA so this limitation on advice does not help me in the least.)

      While total home equity has grown for seniors, a certain amount of that INCREASE comes from those 3 million seniors turning 62 each year. The real issue should be is by what percentage has home equity grown from the prior year only for those 65 through 75 (which includes the average ages of the youngest borrower for almost two decades now).

      I fully support your position on the need for more education being available for loan officers but I do not believe it should be mandatory and there should be no certificates or other forms of recognition from the industry for this kind of training for either loan officers or financial advisers other than perhaps for the minimum information needed to qualify for continuing education.

      Yet I still hear from several of those actually leading the endeavor to reach out to the financial community that it is still a drip campaign. Major breakthroughs at the referral level are rare. I do not do not agree with tellingl originators to go out in the way that they have failed in the past but expect much better results. I do not believe this marketing will work for everyone but everyone should give it more than just one try.

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