New Trade Group Seeks to Educate Realtors on the HECM for Purchase Program

In an effort to boost the Home Equity Conversion Mortgage for Purchase program, a Florida trade association recently formed to educate Realtors and other professionals about this frequently overlooked option.

In January, Certified Reverse Mortgage Professional Tim Linger formally founded the HECM Association, after a couple years of beta testing. The reverse mortgage industry has not taken a very active role in teaching Realtors about this loan, Linger said, and the association will work to change that.

“Approximately 99% of all Realtors do not know the HECM for Home Purchase even exists, even in states like Florida where 35% of all homes sold last year were sold to those aged 62 and over, according to the National Association of Realtors,” said Linger.

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The association’s mission is to “provide education, to maintain relationships, and to help with marketing.”

The program offers continuing education credit courses and a certified HECM specialist designation. The two- and three-hour classes meet in-person and through online webinars, with programs targeted to the various boards of Realtors in the state. To become a certified HECM specialist, agents must pass a 30-question exam following the completion of the course.

Because of negative connotations surrounding reverse mortgages, Linger said that marketing the courses has been crucial. Using the word “HECM” and not “reverse mortgage” in the courses’ titles — HECM for Home Purchase: Special Senior Financing and The Morals and Ethics of the FHA HECM — was a “game changer,” Linger said.

“The hard part is getting the Realtor to attend the webinar or live class,” Linger said. “Once they come, the interest is amazing. It’s 100 percent.”

He said real estate professionals are eager to learn more about the loans once they find out there is an FHA program that allows borrowers to purchase a home by putting up half of the market price up front, then financing the rest through a loan that does not require monthly payments.

Kie McCarthy, a broker associate and certified HECM specialist in Orlando, Fla, is one of the course instructors. He said that H4P is probably the mortgage product most misunderstood by Realtors, and he hopes the association will help eliminate the loan’s bad reputation.

Another instructor on the roster, Mike Flahaven, holds a senior housing professional certification and has been educating seniors on a variety of age-related topics for the past 18 months.

As the program advances, Linger hopes to secure a big-name lender to sponsor the program.

“We just need to open up people’s minds to what (H4P) has to offer,” McCarthy said. “We have mortgage people, financial planners, and others in the industry who just need to understand the opportunity.”

This edition of the RMD Report is sponsored by national appraisal management company Landmark Network.

Written by Maggie Callahan

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  • Huge kudos to Tim Linger and his team!
    I have had the pleasure of listening to Tim speak on several occasions and he delivers the message very powerfully, to Realtors, on how the HECM for Purchase can help seniors purchase their dream retirement home! Way to go Tim!!!
    Now, we’re still always going to disagree on not calling it a reverse mortgage but that is a conversation for another day.
    Again Tim, congrats and huge kudos!!!
    What you are doing is exactly what our industry needs!!!

    • Mike,

      With almost 89% of all home purchases over the last 12 years coming from existing home sales per NAR (National Association of Realtors), it is a crime that the Realtor market has not been better developed by our industry. As Tim pointed out in an earlier quotation, 35% of all real estate sales in Florida are attributable to seniors.

      The national picture in 2017 was about 24%. That is a total of almost 1.5 million homes acquired by seniors 62 and older nationally during 2017. This paragraph is a correction to a prior statement on senior participation in the real estate market during 2017.

      Rather than focusing on just the builders where 11% of the market lies, there is a need for the industry to learn to work with realtors where the sales are about 8 times the size of the builder community.

      I will look at home sales more thoroughly latter this year. Although some may think I am changing my tone and sounding more like those who believe that the H4P product is a sleeping giant, I have not changed my views. Right now it seems H4P endorsements may be down in the 2,700 range for fiscal 2018. That would be a 10% drop from last year. After a decade, that does not sound like any kind of giant at all. While the potential is there, the industry is missing out.

    • Thank you Mike. It is YOU that got us to where we are today. YOU are the brains behind the “Sleeping Giant” and the promotions behind it. I am the messenger …and I am glad I can be here spreading the word. By the way, A Corvette is a Chevy. Unless you’d like to call your Corvette a Corvette?! (like I do) ha 🙂

  • Off topic, but I’m curious how an H4P TV spot would do (if executed properly). I would say 90%+ of folks I speak with don’t know that you can use a reverse mortgage to purchase a home. It’s a tough time for anyone to put themselves out there financially, but it could pay off for whomever goes first. The message would immediately go out to the 1M+ buyers that are 62+ and the information wouldn’t have to be disseminated by realtors.

  • Great work Tim! This is something I have wanted to do for NJ Realtors since they just don’t get it. I’d love to connect with you to see how you are getting through to them.

  • For the past 5 years I’ve been working with Realtors specializing in 55+ communities. 70% of Older American’s that are downsizing pay cash. That’s a primary market for me, because I can show the leveraging aspect of the h4p. But for a Realtor, that means they need to present an offer with a Mortgage Contingency. And there isn’t a DU or LP for me to use, to I have to wait until I receive a Conditional Approval from Underwriting, and that usually takes 25-30 days, so the Mortgage Contingency has to be written for 30 days, and the Purchase Agreement has to be 45 days. That’s the only way to safely protect the Buyers good faith deposit.

    As far as Realtors are concerned, an all cash offer is much easier, and take much less time – 14 days is common. They don’t have to worry about a Mortgage, or the Appraisal process, and they’re paid much quicker. Their risk is reduced significantly.

    The only time a h4p makes sense, in their eyes, is when somebody wants to buy a 600k property, but only have enough cash for 360k. Have you tried to get an offer accepted with that Mortgage Contingency? It’s still a Sellers market in my area, and has been for 3 years. I’ve heard some RMLO’s tell Realtors the RPA needs to be written for 60 days … good luck with that.

    Want to get Realtors to accept h4p? Come up with a way to underwrite the file via software, like LP or DU. That’ll reduce their risk, and make it easier to get a Purchase Agreement accepted.

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