A reduced number of qualifying borrowers, adjusting to Home Equity Conversion Mortgage (HECM) program changes and overcoming objections: these are just some of the challenges in the current sales climate discussed by experienced reverse mortgage professionals in a roundtable discussion, which took place at the National Reverse Mortgage Lenders Association (NRMLA) Eastern Regional Meeting in New York on Tuesday.
The discussion, moderated by All Reverse Pro President Elly Johnson, asked the panelists and attendees of the conference about some of the ongoing issues they face on the marketing and sales side of the reverse mortgage industry.
Responses varied from topics like ongoing adaptation to the HECM program changes initiated on October 2, 2017, issues presented by the possibility of a property requiring a second appraisal, as well as a discussion of the most effective practices in having face-to-face interactions with potential borrowers.
Changes in the marketplace
The panel was asked about how the business climate is generally different today, and one of the panelists went straight for some of the major changes the reverse mortgage program has endured within the last couple of years.
“On the one hand, one thing that has changed is that there’s a potential need for two appraisal reports. I bring that up right away because I don’t want that to be an unpleasant surprise,” said Chris Downey, president at Harbor Mortgage Solutions in Boston, Mass. “Barring that, the conversation is pretty much the same. Not much has changed in terms of the reasons people want to take a reverse mortgage. We’re happy for that. The product is great and serves its purpose, so the conversation is similar to what it was a couple of years ago.”
In terms of how some in the industry have adjusted to the October 2, 2017 changes to the program, the resilience of the industry at-large allows it to absorb those kinds of disruptions in stride, according to Ellen Skaggs, reverse mortgage national sales manager at New American Funding in Tustin, Calif.
“Every time HUD announces major changes to the HECM program, there’s a slight downturn for 30-60 days, but volume usually ends up normalizing again,” Skaggs said. “In terms of everyone in this room, a lot of us have rebounded, and we’re beginning to understand our own product a little bit better when we’re selling it.”
How to respond to objections
Another issue encountered by some sales professionals is objections from potential borrowers about not getting enough loan proceeds or high upfront costs. In answering these issues, the key is listening to the client to understand the source of their issue and determining if the complaint is legitimate, according to John Luddy, vice president of reverse mortgage lending at Norcom Mortgage in Avon, Ct.
“The first thing you have to do is evaluate the objection and who is presenting it to you,” Luddy said. “If it’s sincere, I’ll spend a lot of time trying to explain and help them understand what their objection might be about. One of the keys to successful selling is to have a story, and listen to their story.”
In Luddy’s case, he describes himself as a 2nd generation funeral director, and when he shares that with clients they usually find a fair amount of interest in that before opening up about their own stories. This can be a useful segue in his conversations as well, since one objection can often be that a borrower wants to leave their home to their client after they pass away.
“What I tell them is that in the end, anything of value you have to give to your children, you’ve already given it to them: and that is how to make their own way in the world,” Luddy said.
In the case of an insincere objection where an adult child may act belligerently and call a reverse loan ‘a rip-off,’ Luddy repeats exactly what they said and states it in the form of a question to get a conversation started.
‘Words mean something’
Word choice also plays a big role in how to present yourself to a borrower, Luddy said, because sometimes a senior can hear a word incorrectly, which can lead to bad results if misinterpreted in a particular way.
“Watch your language, and watch their body language,” Luddy advised. “Words mean something. As an industry, [I believe] we should stop saying the word ‘proprietary’ because our clients instead hear ‘predatory.’ I never use the word ‘tenure,’ because the client hears ‘ten years.’”
Relating that there is no pre-payment penalty is also beneficial, Luddy said.
“I tell my clients early on that there’s no pre-payment penalty. That’s because most clients who are needs-based are looking for a reason to justify what they have to do.”