There’s a shift under way toward more originators offering both reverse mortgage and forward mortgage products. Yet a complicating factor in this transition out of forward mortgages is the fact that the two industries use different terms to discuss similar concepts.
This is a complicating factor identified by Michael Banner, president of Professional Mortgage Alliance, LLC in Clearwater, Fla.
There are hundreds of thousands of loan officers in the United States, but only a fraction of those produce reverse mortgages, Banner describes. When openly asking why more of them haven’t entertained the idea of originating reverse transactions, Banner is ready with a potential answer.
“Among the top reasons [we don’t make more connections is the fact that] we don’t speak their language,” he says in an email to RMD.
Key terminology differences
There are several more examples to make the point about the disconnect between the languages spoken by forward and reverse mortgage loan officers, respectively, Banner says.
“The traditional mortgage world [has] LTV’s, Loan to Value ratios,” he says. “The reverse mortgage world has Utilization Tiers. The traditional mortgage world has appraised values, while we have MCAs, Maximum Claim Amounts. We don’t speak the mortgage language. [Instead], we made up our own and wonder why the rest of the mortgage world doesn’t talk to us.”
One of the ways this language barrier can be overcome is through making it a part of the education process for people who are thinking of interacting with the reverse mortgage industry, either as a loan officer or a borrower, Banner says.
“I just think the people that are still in the industry need to start including this language barrier, so that when people start talking to a reverse mortgage person, they know a little more about what to expect,” Banner said in a phone interview with RMD. “I don’t think there is a ‘cure,’ but I think it needs to be added to the list of education [topics].”
One person who doesn’t see the difference in terminology as abundant enough to warrant much of a change is Michael Mazursky, owner of iReverse Home Loans.
“The terminology, really, is not that different,” Mazursky says in an email to RMD. “With all the technology available today compared to the past, there’s really no reason not to be able to learn the differences between reverse and traditional mortgages.”
That’s not to say that there isn’t a level of inherent difficulty in making the transition into or out of the reverse mortgage space, Mazursky says.
“The difficult part for a reverse mortgage loan officer may be knowing all the different programs available such as FHA, VA, Conventional, Non-Conforming, Non-QM, etc,” he says, instead of just the identified differences in terminology. “Figuring out where a borrower fits is not always as easy, but if you do your homework, it is not as difficult as it may seem. The technology today allows reverse mortgage loan officers to do training through webinars and online courses. You also have product guidelines to follow, just like reverse.”
In terms of the reason why more forward loan officers have not made the jump to originating reverse, Mazursky says it may not be any more complicated than a traditional loan officer simply being comfortable with where they are, as opposed to a difficulty in grasping terms.
“Why the reverse mortgage loan officer doesn’t want to do traditional mortgages may just be a personal preference, just as a traditional loan officer may not want to do reverses,” he says. “For various reasons, it could be the reverse mortgage company does not want to do traditional mortgages just as the traditional mortgage company doesn’t want to do reverses. However, there are some companies that do both and are very good at it.”
Changing the name, having a ‘slice of the pie’
One idea that Banner has heard that has the aim of bringing more people into the reverse mortgage industry’s fold is changing the name of the product to something other than ‘reverse mortgage,’ because that term has become tainted by persistently bad press.
“I hate that idea,” Banner says. “We have a bad reputation in this industry, but you don’t trick the public by changing its name. You just act better. Show them that we’re not the same reverse mortgage industry of 20-30 years ago. We help people all the time.”
In the end, and reiterating his point about personal preference, the persistent difference in volume levels between traditional and reverse mortgages is an underlying reason for a particular LO to remain in the forward space, Mazursky says.
“It’s just a completely different market and traditional mortgage companies might just prefer to focus on the larger pie instead of the sliver,” he says. “Why fight over the crumbs when you can get a larger slice of the pie?”