Reverse Mortgage Originators See Interest Surge from Prospects and Financial Planners

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.

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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

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  • While it is nice to read about more interest and inquiries from the financial community, one has to wonder when will the related HECM case number assignments (CNAs) and HECM endorsements be reflected in monthly counts? It is clear that proprietary reverse mortgage closing are down.

    Optimism has a way of declaring phenomenal growth with just the phenomenal part missing. Over the last year, we heard all kind of false claims about the high number of proprietary reverse mortgage closings as well.

    We know that case number assignments (CNAs) have been improving but not to the extent that the anecdotes expressed in this and other RMD articles seem to indicate. We are not reading about these lenders as well as others reaching all time HECM CNA and HECM endorsement highs as a result. In fact, after three months in a row (August, September and October 2019) of over 5,000 each, November 2019, December 2019, and January 2020 had total CNA counts of 4,481, then 4,169, and 4,489 respectively. February 2020 had 4,716 CNAs and March 2020 had the highest total CNA count in the last thirty months even though it was only 5,657. The highest total of CNAs for any month was September 2017 with 20,400 CNAs.

    It would be horrible if the supposed high interest in reverse mortgages by financial advisors came and went with minimal impact on CNAs and HECM endorsements. Is that possible? You bet.

    One of the leading financial articles on HECMs in 2012 assumed a retirement period that excluded 2008 and thereafter. Why? Because in the eyes of the author, it was so HIGHLY UNLIKELY that there would be three substantially bear markets in a 30 year time span. Guess what? That in part invalidates several of the incredulous conclusions made in that article. I remember asking the author if I could speak to him about his questionable assumptions with the answer coming that he did his math right. Such hubris does not belong in a financial industry geared to reaching out to the senior population in this country. The ridiculous thing is that article is still highly recommended by this industry to financial advisers.

    Unless you understand an article and its mathematics, I strongly suggest you do not recommend it.

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