Launching any new business during the height of the COVID-19 coronavirus pandemic is no easy task, particularly in an area of the country that is seeing rising numbers of infections. For the launch of Florida’s Reverse Mortgage Center (FLRMC), however, focusing on the potential benefits of a Home Equity Conversion Mortgage (HECM) for Purchase (H4P) looks like an efficient pathway towards success, while also providing area seniors with additional options to better their circumstances in retirement.
This is according to Rick Foxx, CEO of FLRMC in an interview with RMD. As the company hits the ground running in reverse mortgages as of early 2020 and launches its new website, the organization aims to appeal to the over 4 million seniors aged 65 and above that call the state of Florida home, according to state estimates. It also wants to communicate the potential advantages of financing the purchase of a home with a reverse mortgage, which is “tailor-made” for area seniors, Foxx says.
Origin of FLRMC, the benefits of reverse mortgage for purchase
A mortgage industry veteran of 24 years, Foxx eventually started his own company. As he delved deeper into the reverse mortgage product category after attending a conference, he found something that he noted could benefit seniors, while also potentially thriving in his community. It was around this time that he learned more about the H4P concept, and he immediately noted that this could be an avenue worth greater exploration.
“I mean, it’s great for Florida, especially, with all the seniors [that live here],” Foxx tells RMD in an interview. “I love it for our market down in Florida. Really, obviously there’s no risk of foreclosure unless they don’t pay their taxes or insurance. In my mind, it’s tailor-made for someone that maybe sold a house up north, wants to move down, can do a reverse purchase, and put about 50 to 60% down.”
Because there are no payments for as long as the senior lives in the home, the product concept is perfect for a retiree who may not want to touch their retirement accounts or 401K, or who may not want to pay cash for a house.
“I figured that to differentiate ourselves from our core business, which is Foxx and Associates Mortgage and Foxx and Associates Real Estate, we just went for the name ‘Florida’s Reverse Mortgage Center,’” Foxx says. “This more closely matches the market, and it’s not confusing. We’re going for that exact niche, so we formed a separate company for it.”
Marketing by becoming a local reverse mortgage resource
To further bring the new business and name into focus, FLRMC launched a new website this summer that is core to the business strategy that has tended to work well for reverse mortgages, Foxx says. Much of the reason behind the strategy the company uses is due to the general tech-savviness of the seniors that he serves. For the most part, clients would give the business a call knowing exactly the kind of product they want to pursue, and more of the incoming calls were centered on H4P inquiries.
“We’re getting more and more seniors that actually call up and request a reverse mortgage specifically for purchase,” he says. “They’re requesting that mortgage product, immediately, right out of the gate. We don’t have to really explain too much about it. So, I realized that they’re doing a lot of research themselves.”
Instead of appealing to seniors by pushing a specific strategy such as direct mailings, letting potential clients do the research themselves ultimately allows seniors in the area to find the website, and an incoming call then happens “when they’re ready,” Foxx says. This more passive retail approach aims to contrast with a wholesale approach.
“We’re trying to do the opposite: we offer all the information along with a calculator, and you figure out exactly what we can do for you,” he says. “And then pick the phone up. I’m not going to set up a boiler room of telemarketers to call them, when they prefer to just call us when they’re ready.”
Focusing on HECM for Purchase, H4P proliferation
Since a fair amount of incoming inquiries were related to HECM for Purchase transactions, making it a focus of the business seemed only natural. On top of that, Foxx is confident in offering it because he sees the benefits it can offer enough for himself, which makes him more dedicated to selling that variation of the reverse mortgage product, he says.
“We are definitely pushing [the HECM for Purchase] hard because I personally would get one myself,” he says. “I really believe in the product, because the minute I turn 62, [I plan on getting one]. My house is going to be free and clear, and I have no kids. It’s kind of a no-brainer for me. I can sell this product because I’d buy it myself.”
The potential benefits of HECM for Purchase may not be as present in the minds of clients because it’s still a relatively little known subcategory of the reverse mortgage industry, Foxx says. The numbers would seem to support that assertion. According to data shared with RMD by Reverse Market Insight (RMI), there were 2,305 H4P endorsements in 2019, compared with FY 2019 HECM endorsement volume of just over 31,000 according to HUD.
Florida has emerged as a major area among H4P activity that is taking place, however, recording 245 such transactions in 2019, making it the second-highest state in the country for H4P originations. California was first, with 411 H4P endorsements, according to RMI. Still, those figures are a fraction of regular HECM volume. This is for two reasons, according to Foxx: not many people know about the H4P option, and it’s easy to find negative headlines related to the wider product concept for those doing their own research, he says.
“As far as the HECM for Purchase, it’s been well received,” Foxx shares. “Everyone I’ve talked to about it loves it. It’s just a matter [of the fact that] people don’t know about it. I didn’t even know about it, and I’ve got 24 years in the mortgage business. 18-to-24 months ago, I had no clue you could do a reverse mortgage for purchase.”