Clearing Common Training Hurdles for New Reverse Mortgage Pros

New reverse mortgage loan officers in search of education have their pick from a smorgasbord of on-demand training courses, including a growing number of intensive programs aimed at filling the gaps in the typical eight-hour NMLS continuing education classes.

As more forward lenders look to enter the reverse marketplace as an additional revenue source, developing the skills necessary to serve the community — while also realizing the differences between a Home Equity Conversion Mortgage and a traditional loan — might be their biggest hurdle.

“A reverse mortgage is a totally different product, with a longer sales cycle, and for a protected class,” Scott Harmes, who designed and developed C2 Financial’s reverse mortgage division, told RMD.

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Harmes was the main architect of C2 Reverse’s Training & Certification Program. Launched in late 2016, it teaches loan officers practical skills like how to use reverse origination software and reverse-specific sales and marketing techniques. Today, C2’s reverse mortgage loan officers bring in a bulk of the company’s business.

Yet even for the most experienced trainee, making the transition into the reverse space can be daunting. Working with a protected class means adhering to a higher set of standards and potentially taking on more legal liability. That’s why the National Reverse Mortgage Lenders Association’s code of ethics, which covers issues including how to detect elder abuse, is mentioned early in C2’s program, said Harmes.

The sales cycle, which sometimes lasts years, can be an emotional time for borrowers. It’s usually the last transaction they will ever make on the home where they may have lived for decades. Reverse loan officers must learn to communicate not just with homeowners, but also with financial planners, accountants, attorneys, and any other advisers that a prospective borrower may have. As they build relationships with older homeowners, they need to spell out in simple terms complex financial topics like the line-of-credit option included in some HECM products.

“If you’re not in it for the long run, you’re probably not going to be successful,” Harmes said.

NRMLA’s Education Committee now partners with Loan Officer School, a training and licensing company, to offer nationwide reverse mortgage continuing education. Dan Hultquist, who co-chairs the committee, notices one commonly misunderstood area: regulations regarding spouses.

Hultquist said new loan officers often ask him about protections for non-borrowing spouses included in HECM products. For instance, upon the death of the last borrower, it’s possible to delay the “due and payable” status of the loan for a NBS until their own death or other event that causes the loan to mature.

“Loan originators don’t understand they only have protections if the borrower dies,” said Hultquist, who is Live Well Financial’s vice president of education and organizational development .

He advises originators to educate prospective borrowers about factors that can trigger the maturation of a loan, such as the remaining spouse moving to a nursing home for over a year, and to explain up front that planning for in-home care may be necessary when a non-borrowing spouse is involved.

Written by Clare Curley

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  • A few years back a reverse mortgage publication came out giving dozens of ways HECMs can be used by seniors. One of them laid out a plan where a retired couple had acquired time shares giving them access to 28 weeks out of the year that they intended to use annually. Each was for a location where they would spend 2 weeks. They also intended to travel overnight to several of these locations by car.

    Regulation 206.6 states in part: “Principal residence means the dwelling where the borrower and, if applicable, Non-Borrowing Spouse, maintain their permanent place of abode, and typically spend the majority of the calendar year. A person may have only one principal residence at any one time. The property shall be considered to be the principal residence of any borrower who is temporarily in a health care institution provided the borrower’s residency in a health care institution does not exceed twelve consecutive months.”

    Why the author of the article thought that the story was appropriate for a model use of HECM proceeds is unknown. Apparently both the lender and the originator were prominent in the industry “so thus it must be OK.”

    Notice that the reg is modified by the word “typically” but how can one argue that the seniors would “typically spend the majority of the calendar year” in the HECM collateral if they intended to spend at least 28 weeks of the year at time shares traveling overnight to go from and return to the HECM collateral for the foreseeable future.

    • You bring up a great point about the word “typically.” I call such words “weasel words”, and when you find them in government regulations, it means there are exceptions to the rule.
      In this example, it highlights the point that traveling to the national parks for a year would not necessarily constitute a maturity event, as they would still have one principal residence where they “typically” spend their days.
      Vacancy “generally” (another weasel word) becomes an issue when the last borrower leaves the home for 12 consecutive months for “mental or physical incapacity.” A good example from a few years ago was a Mormon couple that wished to take an 18 month missions trip. They were advised to stay in close communication with their servicer and identify who was caring for the home and paying property charges.

    • I read the phrase, “typically spend the majority of the calendar year” to mean just that – “typically”, but not always.

      A borrower who does a lot of travelling has a principal residence, even if they may NOT spend the majority of their time there. The fact that they like to travel does not preclude their having a HECM on their principal residence.

      The address on their driver’s license, on their tax returns, and where they receive the bulk of their mail is generally used to identify the “principal residence” of a borrower, not necessarily where they spend the most time.

      I am not aware of any specific ‘occupancy time’ requirement in the HECM Handbook, but would appreciate the reference if such exists.

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