How Originators Are Retraining Referral Partners As Reverse Mortgages Evolve

Still feeling the impact of rule changes to the reverse mortgage industry applied by the Department of Housing and Urban Development that went into effect on October 2, 2017, as well as an influx of new proprietary reverse mortgages, originators find themselves having to take a different approach concerning their business relationships with their referral partners in order to bring all involved parties up to speed with the relevant product changes.

Originators now have to contend with new realities in light of retraining their referral partners on the product changes, including some new specific associations between originators and partners and adapting to new sets of rules and combating misinformation and disorientation that naturally arises out of a major industry shift in policy.

“[The rule changes] really gave our business a knockout punch, there,” said Mike Peerless, Reverse Mortgage Director at Holland Mortgage Services in Ormond Beach, Florida, with respect to changes in principal limit factors and mortgage insurance premiums. Still, in spite of that, Peerless says that he’s still largely able to work with the same professional partners.


“The same referral sources will still send me business. I do explain to them that things have changed, and that less people are qualifying for [reverse mortgages]. They understand that, but they still have faith in it,” he told RMD.

He also talked about the legwork he does in maintaining relationship bonds with his referral partners.

“I belong to the local board of Realtors, and go to functions and do presentations for them, and they trust me enough to give the referrals to me,” he said. “They know that there’ve been changes since last year, but they don’t hesitate to give me a referral. They know that I’m going to do what’s right.”

“I have a local newspaper column, and I’ve devoted a couple columns to guideline changes,” said Laurie MacNaughton, a consultant and originator for Atlantic Coast Mortgage in Virginia.

She takes advantage of her background as an educator to communicate the realities of the rule changes through a number of different channels, in addition to targeted emails. “I send [them] out to certain sectors [like] attorneys who are dealing with conservatorships, [since] they need to know ahead of time whether this is something that’s going to be worthwhile to recommend to their clients, and real estate professionals. […] So, I have very sector-specific outreaches.”

This is exactly what originators should be doing, according to longtime reverse mortgage industry expert Shelley Giordano of the Funding Longevity Task Force at the American College of Financial Services.

“The originators who are successful today, and in 2015-16 are successful because they’re self-actualizing,” she told RMD. “They’re not sitting around waiting for the phone to ring, they’re out there building relationships, building their value, and building the value of the HECM again and again.”

She also added, “If you don’t do stuff, nothing’s going to happen!”

MacNaughton told RMD that it’s not the job of the referral partners themselves to stay up-to-date with the specifics of the reverse mortgage rule changes, and so they shouldn’t be expected to be keeping up with the shifts the same way that originators do.

“How otherwise could they know? Nobody is waking up in their busy professional day asking, ‘I wonder if there are any changes to the reverse mortgage program!’” MacNaughton said. “Even people who are vaguely aware that there’ve been changes aren’t going to read the details. That’s my job: to apprise them of those changes.”

MacNaughton also shared that when it came to reacting to the rule changes and what they would mean for prospective HECM clients immediately after they were handed down, she had to move quickly, and that it’s an ongoing process even more than a year after the changes were first announced.

“As soon as I took the old quoting tool numbers and reloaded the new ones, it was just flamingly apparent that this was going to be something we have to get the word out [about] very quickly. And, you don’t deliver a message like that [in] one fell swoop, you have to say it again and again. So, I’m continuing to get the word out.”

Peerless also related that in terms of the rate changes and other consequences stemming from the new standards, honesty is the best policy.

“With our clients, I lay out the truth to them and tell them that this is the way it is, and if it’s not right for them, we let them know that. We’re not going to put them into something that we don’t think is going to work,” he said.

Written by Chris Clow

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  • This is not “retraining.” This is merely updating.

    From the time I came into the industry almost 14 years ago, the HECM is structurally the same. While the PLF tables may have changed, their use and determination have not. Some might point to NBSs and try to argue how PLFs have been changed for them but is the change is a modification of how this special category of multiple mortgagor must determine the age that must be used in determining the PLF?

    Rules come and go. Yet to this day, a HECM is a HECM.

    What originators are now becoming attune to is that loan referral sources need updating continuously. My uncle bought huge car fleets for his company. That firm used a third party consulting firm to make the process as free of bias as possible. The consultants provided this service to many larger companies. These consultants would tell my uncle how not only did go to the major car makers to gather the data that they needed to match their clients’ needs with the best possible vehicle at the least cost to their clients but the fleet sales divisions of these same car makers came to them to be certain they had the best information to make their determinations.

    So is this retraining our referral sources or simply updating them on significant changes to the products available to them on a timely basis? I believe it is the latter.

  • I feel George Owens comment was very well put. George also did a great job using his uncle as an example.

    Mike Peerless, Reverse Mortgage Director at Holland Mortgage Services and Laurie MacNaughton, a consultant and originator for Atlantic Coast Mortgage in Virginia also came out with some very good points and suggestions.

    As I look at the changes to our industry, I still see many opportunities staring us in the face. Retaining referral partners that an originator had or has is important retain. However, what may be more important is to find new ones!

    We are in a completely different environment, we are not that need based product of last resort any more. Because of this, we must find new partners, a different approach to the market and work harder as well as smarter than ever before. This is a must in-order to survive in today’s reverse mortgage space!

    Understand and learn how to deal with the financial planning community. Go out and talk to elder law attorney’s, small community banks and long term health care providers. Show them how you can become a valuable partner of theirs and how you can be a benefit to their clients!

    This will take research and hard work, but it will pay off in the end. The H4P product is a great program to utilize with the real estate industry. This is a tool you can use to show the broker and their agents how they can make additional sales above and beyond what they are doing now. What reel-estate broker along with their agents would turn that away!

    Search and use data sources, start searching out senior homeowners that have little to no debt on their properties. A reverse mortgage can be a valuable retirement planning tool for these people.

    In closing, I want to reiterate what I have already stated! We have plenty of opportunities out there in the reverse mortgage space. All we have to do is learn about what the new partners are all about out there. We need to plan our days better, do a great deal more research work and plan on having to put more time into developing your career!

    John A. Smaldone

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