HECM for Purchase Success Can Rest on a Few Key Connections

It’s a given that Home Equity Conversion Mortgage for Purchase originators rely on partnerships with builders to grow their business. Not only do they accrue business referrals this way, but originators become an important conduit by helping builders educate their clients about the program and potentially sell more homes.

With the right person, a single connection can become the main source of business for an originator.

“All of my business comes from networking,” says Chris Bruser, a Tampa-based loan officer for Retirement Funding Solutions.

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Years ago, a chance conversation helped his business take off after a friend in the conventional mortgage space put him in touch with a builder who worked with active adult communities in Florida.

“When I explained that [H4P] is a financial tool designed for people 62 and over looking to buy a new home, the builder completely got it,” Bruser says.

Under the HECM for Purchase program, qualifying homeowners can purchase a new property with a reverse mortgage, typically in conjunction with a sizable upfront payment. The standard HECM rules then apply going forward, with the borrowers not required to repay the loan until they pass away or leave the home. Allowed by the Federal Housing Administration since 2008, the program has always occupied a niche within the HECM lending space, commonly due to misconceptions about how the transactions work or a lack of knowledge about the HECM for Purchase option among buyers and partners.

Originators can make inroads with the contacts most likely to bring in business by targeting builders of aging-in-place communities and condos aimed at older homeowners, in addition to other FHA-approved homes. To do so, they must use conversations and meetings as a chance to set expectations with everyone involved, from builders and real estate agents to field operations teams and sales agents.

Once these communities understand how the program works, referrals could start coming in.

“It’s word-of-mouth, but building relationships with sales associates at communities is the most important thing,” says Laura Brannock, a loan officer with Reverse Mortgage Funding who focuses primarily on North Carolina.

She recently stopped by a “55-plus” community to talk to the sales agent and left him some literature on the H4P program.

“He had heard about it but didn’t have any information on it,” she says.

He was excited, says Brannock, so she scheduled a follow-up call soon afterwards to answer any questions he had. Brannock also routinely meets with associates at open houses, sales centers, and model homes in new communities. These new contacts eventually refer clients to her who want more information about the H4P program.

Originators can similarly ask real estate agents if they’d like to increase their business by using HECMs to bring business to homebuilders. Doing so earns the agent a referral fee from the builder and creates another important connection for the originator.

Generating referrals is daily work, says KleinBank reverse mortgage originator John Leer. “It’s ongoing: making calls, talking to agents, educating them about their ability to help clients find a better house that maybe the client didn’t think they could afford,” he says.

The ability to partner with builders is key for just about any HECM for Purchase originator to thrive. Chamber of Commerce events, local association meetings, and financial planning workshops all offer the possibility of making new builder connections. It’s just a matter of venturing outside the office.

Written by Clare Curley