Until the industry places greater emphasis on Realtor education and connections, Home Equity Conversion Mortgages for Purchase are not going to see much of a boost, reverse mortgage educators said — and part of that strategy could include inspiring real estate professionals to spread the word on behalf of reverse mortgage originators.
Michael Banner, an active Realtor educator and the president of Professional Mortgage Alliance LLC in Clearwater, Fla., said sales have not increased largely because the industry has “ignored” the product.
He said he feels that the industry should be putting more emphasis on connecting with and educating real estate professionals. In the last 60 days, Banner has taught two classes, reaching roughly 70 agents. To get numbers up, Banner encourages all originators to get in front of as many real estate professionals as possible, even for a casual lunch or coffee.
“You have to see a lot of them to get that first mortgage,” he said. “It’s a numbers game and that’s what frustrates most loan officers.”
Tim Linger, broker and owner of HECM Senior Home Financing in Orlando, Fla., agreed, saying that real estate agents are still apprehensive about the product. Linger is also the founder of the HECM Association, a trade group launched in January and aimed at educating Realtors and other real estate professionals.
“It is all about HECM education to get past the reluctance,” Linger said. “We do our best here.”
Frequently considered a “sleeping giant” in the reverse mortgage space, the HECM for Purchase transaction allows senior homeowners to buy a new property using a sizable down payment, with the reverse mortgage proceeds covering the rest. While potentially beneficial for certain borrowers interested in downsizing or potentially up-sizing in retirement, the product has yet to catch on among real estate agents and, by extension, the general public.
The program received a long-awaited update last fall, when the Federal Housing Administration relaxed its rules surrounding its requirements for newly built homes; prior to the change, homebuyers using a HECM for Purchase on a new-construction project had to wait until local authorities issued a certificate of occupancy to even submit an application for the loan, posing a funding problem for builders and real estate agents.
Banner credits his years in the forward mortgage industry for his ability to make impactful connections with agents.
One of these connections is Don DeLucas, the lead instructor at A+ Plus Schools of Real Estate and a broker in Melbourne, Fla. Not only does DeLucas educate agents about HECM for Purchase, but he also used an H4P to buy his “dream home” with the help of Banner.
“It’s something I really believe in because I’ve had such a positive experience with Mike (Banner), and I’ve seen the concrete benefits that my wife and I were able to achieve,” DeLucas said.
He teaches about H4P in his broker’s class, which he said is filled with “seasoned” real estate professionals.
“A lot of the folks in the industry, they know absolutely nothing about a HECM for Purchase,” he said.
With education being the key to dispelling the potential misconceptions surrounding the reverse mortgage program, DeLucas said he expects to see more HECMs for Purchase closing in the future.
“Education for the professionals in the business and then the consumers – it’s a two-prong approach and everyone needs to be educated,” he said.
Currently, DeLucas is working with clients who had bought a house with him 15 years ago. The couple is now looking to downsize to reduce their home-maintenance burdens. He told them what an H4P could get them in terms of their wish list, using his own story as a testimony.
“I said, ‘Let me give you the particulars of my situation,’” DeLucas said. “It’s a breath of fresh air. He thought I was making it up. They are very enthused and they never even knew this existed.”
Written by Maggie Callahan