When it comes to being a reverse mortgage originator, there are many different job-specific duties and attributes that make the profession unique. Far more than those working in the traditional forward mortgage space, reverse mortgage originators often have to take a slower, consultative approach to interacting with clients and walking them through the complexities of the reverse mortgage product.
Education is an important tool, but as any originator who has spent time in this field will tell you, it’s also important to be prepared for a whole host of ways in which a client may want to employ the use of their loan proceeds. Considering the practical applications that can come from engaging in a reverse mortgage transaction, an originator has to be ready for almost anything.
Different needs, one product
Talking to different loan officers across the country is likely to yield an abundance of different reasons that their clients are engaging in a reverse mortgage transaction. For instance, loan officer Jack Belles of Fairway Independent Mortgage in Providence, R.I. shares two very different scenarios from his recent experience.
“The first scenario was a couple that did not have a mortgage payment or really any debt, but decided to do a reverse mortgage,” Belles said. “They weren’t going to pay off any mortgage or cash out anything at closing, but they just wanted to leave the line of credit and let it grow, so if they needed it in 10-15 years, that credit line was going to grow substantially over that period of time.”
Using a reverse mortgage as a kind of “insurance policy” against unexpected future expenses is one possible application, but there are also scenarios where the same loan officer needs to have enough versatility to address clients that are more needs-based, as well.
“[I’m working with] a woman who was referred to me by her attorney,” Belles says. “Her husband had just died, and the house [was in disrepair]. But, she is just a sweetheart of a person. She had just dedicated the last four years of her life to going to the nursing home, seeing her husband who had Alzheimer’s every day, and had just kind of let everything go.”
Belles shared that this client is focused on upgrading and modernizing the house through the use of a reverse mortgage.
“[After making repairs to the house], you know, she sounds like a different person. She’s up, and much happier.”
The path of ‘why’
Being versatile also means knowing how to zero in on whatever primary issues clients might be able to solve with a reverse mortgage. For Rich Pinnell of Guild Mortgage in Redding, Calif., one of the ways this can be accomplished is by liberally using his favorite word: ‘why.’
“My questions always start down the road of ‘why,’” Pinnell says. “Eventually, as we go through each of the steps of why [an issue] happened, we find the root of the problem.”
A hypothetical scenario that helps illustrate this is someone being late for work. When you begin at that very basic premise, you drill down by just asking the question, he explains.
“Why was I late for work? My car broke down. Why? Because I blew a tire out on the freeway. Why? Because I didn’t pay attention to how bad my tires were, and when I finally noticed it I didn’t have enough money to put new tires on the car. Why?”
When asking it enough times, someone can see that the reason this person was late for work had nothing to do with not wanting to show up for work, Pinnell says. Instead, it had to do with the fact that in planning their life, they may have missed a bigger detail that could lead to problems later on.
Getting to the underlying details
A practical application of that idea comes in the form of a reverse mortgage client who came in with a desire to get rid of a forward mortgage payment, a relatively typical use of the loan. Asking ‘why’ on a scenario as seemingly ‘open-and-shut’ as that, though, may lead to details that can affect the overall financial plan, Pinnell says.
“I have a client who has a $4,000-a-month mortgage payment,” he says. “When I asked why he wanted the reverse mortgage, here’s where it gets unique: because his mother-in-law is living with him now, and she’s rapidly headed toward needing 24-hour care or going into a retirement or assisted living home. She has some money left, but they’re at that margin where she’s around 85, and she could live another 10 years. She doesn’t have that much cash to support 10 years of a $6-7,000 a month assisted living bill.”
This led the client in a direction where he sought to determine strategies for coming up with enough of a cash flow on his own and, with a combination of his mother-in-law’s assets, finding a way to support her for as long as she needs it.
“That’s where the initial interview is so important to educate, and find out what the real driver is behind the whole process,” Pinnell says. Finding out the detail behind simply eliminating a forward mortgage payment can help the loan officer to more specifically assist the client in accomplishing his or her financial goals through a reverse mortgage.
What versatility can extend to
Because of reverse mortgage program changes instituted by FHA over the past several years, originator versatility can also mean opening up to the origination of different mortgage products, including traditional forward mortgages.
“I think in this day and age, you have to be versatile,” Belles shared. “I would personally find it tough if I were just doing reverse mortgages to survive. […] [After a number of product changes over the years], I looked at versatility as a necessity [in terms of originating] both reverse mortgages and other kinds of mortgage financing.”
Versatility in solving financial issues for borrowers can also extend to those clients who are not needs-based, Rich Pinnell explains. One instance for him involved a financially stable client with a $600,000 home who could easily afford his forward mortgage payment, but decided to engage in a reverse mortgage transaction for a very different kind of purpose.
“I started talking to this guy to ask him what the reason is for getting a reverse, thinking it was primarily to get rid of the forward mortgage. He told me, ‘not really, since the $800 a month isn’t a big deal. I’m a car guy, and I’ve decided I want to own a Tesla.’”
After the client spoke to his adult children about taking some cash out of his investments just to buy that car, however, they told him that withdrawing $80,000 out of his existing pool of investments just for the purpose of buying a Tesla would not be advisable.
“The reality and what set the conversation going toward a reverse mortgage is that if he took the $80,000 out of his investments, that would be a taxable event,” Pinnell says. “On top of that, it [would carry tax implications with respect to Social Security income]. To him, that didn’t make sense. He didn’t want to give the government $15,000 so he could buy a Tesla.”
Ultimately, the client engaged in a reverse mortgage to eliminate the forward mortgage, got a line of credit of approximately $200,000, and paid cash for the car.
“If I had a preconceived notion when I started talking to my clients about what they’re going to do with the money, I would be doing them a disservice,” Pinnell says. “My whole thing is education, and finding out what the clients need. I don’t want to try and fit them into a box I’ve already created for them.”
The importance of selective silence
A unifying factor among originators is the need to develop listening skills as an essential tool for reverse mortgage origination.
“I think now more than ever you have to be a listener,” Belles says. “You have to look at what it is that [clients] are looking to accomplish. You can’t help everybody. In sales sometimes the best thing is to just be silent and listen.”
Equally as important as knowing when to stay silent is the ability to know when to ask questions, and what questions to ask, says Pinnell.
“The questions are the most important part of what we do,” he says. “The rest of it is just paperwork.”