With retirement portfolios taking a hit due to market losses during the global COVID-19 pandemic, reverse mortgages have recently been touted even more among financial professionals as a viable option. And originators say they are seeing an increase in inquiries as a result, as well as contact directly from the financial planning community, who are interested in learning more.
This recent interest among both financial planning professionals and prospective borrowers may signal a long-awaited connecting of the dots between reverse mortgages and financial plans.
Originators say they are seeing a surge in interest based on the idea that people can tap into the equity in their homes — many of which have retained their value during the crisis — versus drawing down on retirement portfolios that have been hit hard. The renewed value proposition is another tool for loan originators to use in conversations with prospective borrowers who may need to bridge the gap until the market recovers.
Yet some say the market is aware of the product’s value given the circumstances without having to message directly to them.
“We’ve been so busy, I haven’t even had time to market,” says Christina Harmes Hika, C2 Reverse, a division of C2 Financial Corp., based in San Diego. “If I did, I’d tell people that it’s a great time to look at a reverse mortgage, but the phone won’t stop ringing.”
Loren Riddick, national director of reverse lending at Thrive Mortgage in Alcoa, Tenn., says he’s not entirely comfortable capitalizing on a global pandemic, and has advised his team to not use it as their primary marketing tool. But, still, Thrive’s reverse mortgage team is still busier than ever.
“I’ve done more group presentations in the last few weeks than I’ve done in the last year,” Riddick says.
Financial planners are also reaching out with inquiries about the product, Harmes says.
“Lately, I’m getting way more in-depth questions and discussions from financial planners, and they’re really listening to me in order to understand the advantages and technicalities,” she says. “Their clients are asking them about it, so they need to know about it.”
Given the current market, financial planners will miss business opportunities if they don’t talk to their clients about reverse mortgages, says Riddick, who estimates that about 30% of financial planners embrace the product today, compared to 5% just a couple years ago.
“It’s an important tool to so many people,” he says. “If a financial planner doesn’t discuss a reverse mortgage with their client, another financial planner will. Especially right now.”
Written by Meredith Landry