The reverse mortgage business has always been a consultative endeavor, since originators often take on the role of a guide for their senior clients through a complicated, but potentially effective financial instrument to help provide them with additional cash when they need it. For years, the reverse mortgage business was a “kitchen table” affair, with a loan officer coming into a prospective client’s home and having a face-to-face conversation about how a reverse mortgage might work for them.
That dynamic has had to go through a necessary period of change due to the outbreak of the COVID-19 coronavirus pandemic. With social distancing and virus mitigation guidelines in effect all across the country, how loan officers remain in contact with both clients and partners has had to change.
In the latest episode of The RMD Podcast which is now available for download, we spoke with Steven Sless, reverse mortgage division manager with Primary Residential Mortgage, Inc. (PRMI) and branch manager with the lender’s Steven J. Sless Group about the new normal of the business, particularly on the fronts of relations with both clients and referral partners.
The new normal for client relations
If any benefit can be found from the current situation, it’s that living with the conditions of the pandemic since March has allowed some originators, including Sless and his employees, to find a sense of what things could look like for the foreseeable future, he says.
“I think we’ve found what our new normal looks like, at least right now,” he tells RMD. “I don’t think things go back to normal anytime soon. In fact, I think in a lot of ways, this pandemic is going to be very similar to 9/11. Obviously these are completely different circumstances, but anybody that went through that knows that life was one way prior to 9/11, and that life looked a lot different thereafter.”
The effects of the September 11th terrorist attacks did alter the way that we live our lives, with an added layer of additional caution that persists today. Similarly, the measures that localities and states are putting in place to encourage distance will likely have ripple effects for any business relying on face-to-face meetings, especially a business which deals with the protected class of seniors.
“We’re all going to get used to social distancing for quite some time,” Sless says. “In how we meet with clients and since we have an exclusive senior demographic, we need to make sure that our clients are protected, and we need to be protected as well. But us being around our clients could be dangerous, not just right now but in the months to come. Adapting to virtual meetings, docu-signs and digital applications, those things are going to be important. I don’t think those are short-term, I think those are going to be with us for quite some time.”
New restrictions can bring new conveniences
It hasn’t all been detrimental to the reverse mortgage business process. Some of the additional restrictions have revealed additional resiliencies that the reverse mortgage client base has, Sless says.
“Our clients have been surprisingly very resilient and open to being flexible with us,” Sless says. “Many have adapted to video conferencing and Zoom, it’s really been amazing. We haven’t shied away from technology, I think my group has been on the forefront of using technology before anybody else really was. We were doing video calls five-to-six years ago, before it was a ‘thing.’ But our clients right now, for the most part, have been very open, receptive and willing to work with us.”
That also extends beyond video meetings to the electronic signing of documents where such technologies are allowed, and the client receptivity to this element in particular has been eye-opening for Sless and his employees, he says.
“DocuSign is how we’re getting all of our applications signed right now, and [clients] actually love it,” he says. “We’ve always thought we have to sit with our clients at the kitchen table, or if we can’t, we at least have to have a notary go out, and that somebody has to be there to walk them through. That’s just not the case.”
DocuSign in particular provides a level of convenience that has overridden any potential discomfort with a technological convenience, Sless says. In fact, clients have taken something of a shine to using it.
“Our clients enjoy it,” he says. “They enjoy not having to take two hours out of their day to meet with somebody. It’s more efficient for us. Of course, we’re still doing all the education on the front end, and we’re answering questions. We’re jumping on video calls with family but when it comes to the actual paperwork, to be able to have that done in a half an hour versus an hour or two hours, they’ve enjoyed it. We’ve enjoyed it, and it’s made us efficient, and ensure that we haven’t really skipped a beat throughout all this. It’s been pretty amazing.”
Referral partnerships during coronavirus
One of the things that Sless and his group have invested a lot of time and money into is advertising, but the additional economic pressure has forced some necessary cuts to advertising initiatives, he says. However, volume hasn’t suffered because the business’ referral partners are stepping up in new ways.
“I mentioned before having to cut out a lot of our advertising, but we didn’t lose volume because we’re getting a lot more referrals now,” he says. “I think as an industry, we’ve been beating the drum for a decade-plus concerning the use of a reverse mortgage not as a loan of last resort, but as a planning vehicle. In a lot of ways that message didn’t really take, but it’s never been what it is right now. We’re getting referrals left and right from our financial planning partners, and a lot of higher net worth clients, and a lot of jumbo reverse mortgage clients.”
This could present a real opportunity to engage financial professionals and other businesses focused on senior-specific financial planning, since the economic pressure has created some new urgency in terms of having finances in order to weather the current economic shock, Sless says. That renewed urgency has notably increased referrals.
“Our referrals are up 25%,” he says. “So, about half of our business right now is coming from referrals. That, for us, was never the case. Our business has previously derived about 25% referrals and the rest of [our business was] the product of our marketing. And when the referral partnerships are up, our cost per closed loan is lower. So, that’s a good thing.”
Listen to the full discussion with Steven Sless in episode 12 of The RMD Podcast, available now.