Teaching Real Estate Agents to Spread the Word on HECM for Purchase

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.

Education chain

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

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  • H4P is embarrassing to present anymore. I used to be able to say “with only 40% down, you can buy a home and not have a monthly mortgage payment obligation”. That was a good deal – the program was appealing to many. Then the rules changed, and 40% became 50% … then the rules changed again, and 50% became 60%. Couple that with 25k in fees – it’s embarrassing. And if the rules change next month, and the PLF is reduced again …

  • George,
    We agree on all points.

    To say “Mike thought his education classes would do a lot more than they have according to his presentations over the years” is the
    understatement of the year.

    I would rate my own success in the Purchase Reverse Mortgage arena somewhere between pitiful and pathetic… truly!

    But I will maintain my position, and that is, it is the Sleeping Giant of the senior real estate marke

    But the Purchase Reverse Mortgage has not failed the industry.
    The industry has failed it!!!

    No one, including NRMLA and the large lenders, gave this product the time of day until the industry started to slip into its current coma.

    And when they did all you heard about was the “builder market.” “Stay away from Realtors”, “it’s impossible to get deals from them”, “they
    have no loyalty”, “soliciting Realtors is like herding cats.”

    What a moronic position for an entire industry to take!

    Builders represent approximately 10% of the homes sold in this Country and Realtors 90%. What a great idea…let’s go after the group that
    sells 10%!!!

    And again I say, the reverse mortgage industry is its own worst enemy!

    • Mike,

      I do not profess to have the lender inside information you do but it is startling that Marty Bell as the editor of the Reverse Mortgage magazine would not dedicate even one sentence to remembering the 10th anniversary of the H4P product in the July/August 2018 edition of NRMLA’s flagship magazine.

      Worse, not even one lender or industry leader placed any emphasis on the anniversary. While I am pleased that Commissioner Montgomery is speaking up for HECMs, how pathetic that there is no industry celebration of a product that has opened doors to Realtors even if the product is still not meeting expectations.

    • >>I would rate my own success in the Purchase Reverse Mortgage arena somewhere between pitiful and pathetic… truly!

      Me too, Michael. I’ve been emphasizing h4p for over 5 years … “somewhere between pitiful and pathetic” is how I’d rate my success too.

  • When we use the word “downpayment”, real estate professionals will naturally say, “wow, that’s a big downpayment” and reject the product outright. But we are NOT trying to sell this product to those looking for 5%-20% downpayment requirements. Many H4P candidates already have the ability to relocate without the need for financing.
    Rather we should call their contribution a “limited investment” into their new home. With the H4P, they can still have no monthly repayment obligation, but they can keep a large portion of their gain on the previous residence. Rarely will they pay capital gains taxes on the sale, which means they just converted housing wealth into liquid retirement savings.
    In essence, part of our failure to sell this product is in how we frame the discussion. Start by removing the word “downpayment” and then explain the resulting retirement planning advantages.

    • Dan,

      Over the years I have worked with numerous real estate partnerships and land development firms. It did not matter whether the down payment was 1% or 90%, in the minds of real estate investors at least, any down payment is the owner’s equity, investment, or skin in the deal at the close of “escrow.”

      You are playing with semantics which in the end serves no one. What borrowers like is generally transparency and in our industry, down payment is the norm no matter what its size. Certainly that concept and language is unequivocally found in the federal truth in lending laws.

  • In reading this article as well as reading everyone’s comments, I can’t agree more with everyone!!

    It is to bad that the industry originators and NRMLA have not hopped on the H4P band wagon!

    I liked what George Owen’s comment said, it was right on target and well put. Don’t get me wrong, the rest of the comments were great as well.

    The H4P product should be a banger upper for all of us, it should be our saving grace product but we ignore to recognize this and we fail to really learn and understand the teaching of professionals like Mike Banner, real sad!

    I go way back in the forward world, I was the founder of a company called Taylor, Bean and Whitaker Mortgage Corp. (TBW). I owned and operated TBW for the first 10 years of its existence, until I sold it to a bank out of Illinois in 1991. TBW eventually went on to be the largest privately held mortgage banker in the country. I was in the forward world for 30 years and now over 21 in the reverse mortgage space but still learning daily!

    The point I am getting at is that 90% of my business and that of my loan officers in the forward part of mortgage banking came from realtors.

    Realtors, good ones that is, They are hungry, they want to make money, they are always busy, the good ones! The good ones are the ones you want to go after, they are the ones that will listen to you if you know your pitch and your product well!

    You have to go to the broker first, do NOT by pass the broker, this is very important to remember! Sell the broker, first, than set up an educational workshop presentation with all of the broker’s agents!

    Show them how to make money, show them how to market the H4P product, show them the income they are missing out on by not utilizing the H4P product!

    Go as far as to making up a marketing add as well as a flyer they can use to draw in senior clientele, locally and out of the area the agents are in! Get creative with them and teach them how to be creative with the H4P product!

    Above all, stay in touch with the agents you met and the broker. Be there, help them on an on going basis, don’t let them forget about the H4P product and all you taught them about it. The follow up is equally important as the initial contact and presentation. The two go together, with out the two, it will NOT work in the end!!

    The business is out there my friends, Mike Banner knows that, Mike has not failed at all with his teachings, he is one of the best, the industry has failed him!!!!

    John A. Smaldone

  • Quote from article:
    “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.” END QUOTE

    Until the PLF is raised to at least it’s former pre-“October Change” level, the term “boost,” applied anywhere seems to be a moot point.

    Take my situation for example. I have a pre-“October Change” HECM re-fi @ a $600,000 HUD appraisal.

    However, I can’t:

    1) Refinance again without losing the favorable PLF and having to drop-down to the significantly unfavorable post-“October Change” PLF limit.

    2) Get a H4P without the exact same reasons kicking-in; even though down-sizing would be an attractive option to consider.

    These HECM benefits have been ripped from us, after the fact by the “October Change.” Borrowers originally entered into the HECM agreements expecting re-fis and H4Ps to be available in the future. Now, the effect of the changes are similar to a great penalty for cashing a 401k before it’s due.

    In addition to the stake driven through the heart of new originations by the PLF “October Change,” how many prospective H4P borrowers are in a similar situation as my own? It adds up,

    Also, I believe that the notion of prospective borrowers not being enterprising enough to have looked-into the difference between their pre and post October Change financials is a myth.

    Getting more real estate agents interested in H4P borrower-referrals is “beside the point” if the borrowers “don’t like the dog food.”

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