For originators, having sales conversations that ultimately yield a new reverse mortgage loan that accomplishes the goal of closing while meeting the specific needs of borrowers is always the goal, but that goal also comes with the chance of failure.
Sometimes making those conversations even more difficult is a scenario in which a potential borrower just can’t make up his or her mind about whether to get a reverse mortgage – an uncertainty that can arise for an abundance of reasons – and dealing with scenarios like these can often be the instance that makes or breaks a successful closing.
Further complicating this is the fact that this borrower uncertainty can last a long time, especially compared with the typical timetable for a forward mortgage.
RMD reached out to John Luddy, vice president of reverse mortgage lending at Norcom Mortgage in Avon, Ct., to speak on the topic of on-the-fence borrowers, and tactics he has found helpful over the course of his career in converting those “fence-sitters” into closed reverse mortgage loans.
One of the first tips that Luddy offers from his wealth of experience in the reverse mortgage industry is to go into the sales discussion from a place of confidence.
‘Assume the sale’
A reverse mortgage loan officer can go into these kinds of discussions from a position of at least some confidence, because if the borrower wasn’t receptive to taking the reverse mortgage in the first place, then there wouldn’t even be a conversation to talk about, he says, based on his long standing face-to-face approach to origination.
“I assume the sale because I believe in the product, and I believe that anyone that has reached out to me, and indeed has invited me into their home, has some need for the product,” he says.
However, that is a brand of confidence that should also be tempered by patience, since any loan officer understands the necessity of information gathering for a client’s financial challenges. Being patient and giving the client a chance to tell the story leading to the conversation with a loan officer can be beneficial for both parties.
“If you’re patient, and you allow the client to tell you their story, [it also allows them] to think out loud,” Luddy says. “To sort through what’s going on in their life, maybe for the first time. [If it’s] articulated out loud, you’ll detect that need [they have].”
Understand clients’ financial delay
Another key to making a connection with on-the-fence borrowers, particularly those who are needs-based, is to understand that they may be procrastinators by nature. Understanding this in a way that is free of judgment could allow a loan officer to better understand the borrower’s mindset, Luddy says.
“For many of them, they’re by nature fence-sitters and procrastinators,” Luddy says. “You’ll find with them that the fear of the unknown, and of something that they don’t truly understand is greater than any perceived benefit.”
This reinforces the client’s necessity to understand the product based on their need, which then leads to understanding the ways in which a reverse mortgage can help.
Provide personalized context
In determining how the benefits of a reverse mortgage can be best understood by a particular client, an originator can start laying the groundwork for how the topic of the benefits can be approached at the beginning of the conversation, when client and loan officer are still getting to know each other.
“You have to make sure that they understand it on their terms, and you can perhaps do that by starting with a question about what they did for a living,” Luddy says.
Learning about someone’s working life gives invaluable insight into the ways in which a particular person’s mind works, and can be extraordinarily helpful for a loan officer in terms of how to relay reverse mortgage information.
“Knowing that someone who’s a retired engineer is going to want to absorb information differently than a retired art teacher at an elementary school [is important],” Luddy says. “You want to deliver to them the information and details that help them better understand, and then take the fear and anxiety out of the transaction. That way, the fear of making mistakes is diminished, and the expectation for the benefit is enhanced.”
Don’t waste time on unused features
In terms of optimizing both the time a loan officer spends explaining the product and the time a client spends listening to a pitch, a robust exploratory conversation should be able to yield information concerning how a client intends to use the proceeds of the loan. Armed with that information, an originator should not delve deeply into features of a reverse mortgage that will not be used.
This is also important for encountering resistance based on the upfront costs of a reverse mortgage, Luddy says.
“Don’t tell them about features that they won’t avail themselves of,” Luddy says. “Don’t talk about the growth in the line of credit if they’re using all of the money at the closing to pay for a mortgage. You’re wasting grey matter, and if you detect the need and solve that need with the benefits of a reverse mortgage, the costs become less important.”
Specifically for “fence-sitters,” the conversation should revolve around giving a sense of urgency to the idea that a reverse mortgage loan can help improve the quality of life in a relatively short period of time. Overcoming a predilection some may have for procrastination can be difficult, which is why making the process as easy as possible is so important.
“Detect their need, and build a sense of urgency that their life can improve. But, procrastinating can only make [the fear they feel] worse,” he says. “Get them excited and happy, and understand that the fear of making a mistake is greater than any perceived benefit.”
At the end of the day, most reticence arises out of fear. Finding a way to address a client’s fears will go a long way in closing a loan and finding a solution for their financial problems.
“You’ve got to alleviate the fear of making the wrong decision, and make sure they understand that doing nothing, for most of them, is the wrong decision,” Luddy says.