As the barrier between the origination of forward and reverse mortgages continues to erode, charting the course of a forward loan officer into the reverse business highlights many of the ongoing difficulties for those moving into a similar, yet very different kind of business.
Forward loan officers may bring misconceptions as they enter reverse mortgages, but companies can highlight the differences and similarities upfront to help ease the transition.
Biggest misconceptions of forward LOs
Many of the big misconceptions that forward loan officers have about reverse products are actually shared by borrowers, according to Michael Maursky, owner of iReverse Home Loans based in Carlsbad, Calif. iReverse recently started transitioning into offering both forward and reverse mortgages.
“I have talked to traditional loan officers in the past about reverses and even they have many of the same misconceptions as many of the borrowers we talk to every day,” Mazursky tells RMD in an email. “It’s still a perception thing where even those in the mortgage industry don’t understand the product. Many of the LOs still think the same things, like the bank or government owns the home, the kids don’t inherit the property, etc. It could also just be that traditional loan officers are content to focus on their purchase and refinance business.”
Another persistent misconception that forward officers have about reverse is that it’s “just another mortgage product,” according to Scott Harmes, National Manager of the C2 Reverse Mortgage Division of C2 Financial Corp in San Diego, Calif.
“That’s not the case, because we are dealing with a protected class and the pricing protocol is so much different than on forward mortgages,” Harmes tells RMD in a phone interview. “There’s a certain protocol you have to go through to assure that you truly are bringing the maximum benefit to the borrower while still making reasonable comp for the lender. So, as far as misconceptions go, that’s one of the primary ones.”
Satisfaction in dealing with seniors, patience for the sales cycle
There is also an unanticipated difference that reverse mortgages have that forward loan officers can’t anticipate concerning the reward that comes from dealing with the senior population, according to Harmes.
“I did my first reverse about 10 years ago, and it had such an impact on the borrowers that it made me want to really get competent in reverse, and I steered my entire career in that direction because of the reward I get from working with senior homeowners,” Harmes says. “I think that’s something that forward loan officers can’t have a clue about until they actually experience it.”
That difference is absolutely a factor, according to Mazursky, and can help a loan officer to potentially realize what kind of transaction he or she prefers originating.
“I think the traditional loan officer is more about a referral-type business, where they’re going to be more likely to speak with realtors, CPAs or financial planners,” Mazursky says. “[A forward mortgage is] not a product that you really need to explain to a referral partner, they know what a traditional mortgage is and how it works, and it’s more or less about forging those relationships. Whereas with a reverse mortgage, it is more in-depth as far as education is concerned.”
The power of training
One of the biggest difference-makers in the transition from forward to reverse and minimizing those misconceptions can be in a robust training program, according to Mazursky.
“It really comes down to training and the willingness of the individual to want to learn both sides of the business,” Mazursky says. “I come from the traditional side. Whenever I would ask about reverses, I was always told the company that I worked for did them. When it came down to doing a reverse, though, no one knew how to actually do it.”
A lot of traditional mortgage companies may claim to know how to originate reverse business, but don’t have the actual experience in working on that side of the business, Mazursky says. This can be disconcerting for a loan officer who may realize that his or her corporate office can’t provide the proper training to competently conduct reverse.
“The only way for a traditional mortgage company, in my opinion, to get their loan officers to do reverses is with proper training,” he says. “It’s really not rocket science. It’s just a different loan origination system (LOS), but the LOS is much easier to work with.”
When asked if it was easier to train a forward loan officer to conduct reverse or to train a reverse officer fresh, Harmes is clear that the advantage will always be with the person who has previous finance experience, and that’s especially true for a traditional mortgage loan officer.
“I’ve done both successfully, and anyone with a finance and business background has an advantage,” Harmes says. “I think a forward loan officer has a bigger advantage than anybody, because there are only a few new terms that they need to learn. Something like a non-borrowing spouse is something they haven’t dealt with before, or a principal limit factor. But, all of the underlying definitions and technical aspects of even the things that are new to them are of the same genre and technical challenge of the types of things they deal with every day in the forward world.”
Critical factors, room enough for both
Origination software can be a pivotal element to fully understand, when it comes to the most critical thing a forward officer can learn about originating reverse, the Mazursky says.
“We use ReverseVision, and I’d never used it before [I started in the reverse business],” Mazursky says. “But, that didn’t take very long to figure out. I think ReverseVision is actually a lot easier to use than say Encompass or Calyx for traditional mortgages. Those loan origination systems are much more complex and can be more difficult to train on and originate loans.”
Having the right outlook for helping senior borrowers through the complete loan process is essential as well, according to Harmes.
“Having the sensitivity to our senior client-base to help hold their hand and walk them through the process is much more of an interpersonal relationship than you have doing a forward loan,” he says. “There are times on a forward loan where I may only talk to the borrower in three or four conversations. On a reverse loan, they pay more in comp, but they also are much more time-consuming in the origination process.”
Because of currently-low volume on the reverse mortgage side, more companies are offering both traditional and reverse mortgages, says Harmes. While some may believe that a “wall” should stay up between them both, there’s plenty of room for companies to operate in both arenas, he says.
“I still hear from some people in the industry [who think] that the wall between forward and reverse should remain so you either do one or the other,” he says. “In my personal experience where I still do both but my passion is reverse, I don’t see any conflict or any downside to doing both. There is plenty of mental room to hold the knowledge for both disciplines in one mind.”