The reverse mortgage industry is always on the offensive when it comes to adequately educating potential clients about the ways in which the product category can be used by those at or near retirement, but a potential key to expanding the reverse mortgage business could be in the equal presentation of a reverse option for those who are already in the market for a traditional, forward mortgage.
This is according to Harlan Accola, reverse mortgage director at Fairway Independent Mortgage Corporation in the latest episode of The RMD Podcast, available now. Since Fairway is a mortgage company with a significant footprint on the forward side, Accola spoke about ways in which the existing forward infrastructure can be used to offer certain older clients reverse solutions, if their situation could be benefited by the use of a reverse mortgage.
Fairway’s existing company structure includes 8,000 employees nationally, and the company is defined by a collaborative philosophy which permeates its company culture, Accola explains. One of the most pronounced opportunities comes from the combination of the teamwork philosophy with the existing infrastructure so that more age-appropriate clients are given the right information when it comes to reverse mortgages, he says.
“What I look at as our biggest problem, challenge and opportunity, all wrapped up together, is making sure that we’ve got the correct information out there in every office, every location of Fairway,” Accola says. “[I want to ensure that] reverses are given a fair audience and that they’re properly sold, and properly explained. That they’re used when they should be used, because there’s a few too many forward mortgages that are done because people are just used to doing them. And, that’s the biggest problem, I would say. At Fairway, we’re doing too many forward mortgages for people over 62.”
The general acclimation that loan officers have to offering forward solutions may not make sense for a senior who is looking for an adequate way to fund their retirement or increase their cash flow, Accola says.
“We’re trying to [cover] all aspects, so that people are given option A and option B,” he says. “Just like if somebody is a veteran, we certainly want to talk to them about a VA loan. If somebody is a first-time homebuyer, we want to talk to them about a first-time homebuyer program. So if somebody is over 62, why don’t we want to talk to them about a reverse mortgage option? Even if they don’t go with it, they should know about it.”
Learning about reverse mortgages early, and growth the industry deserves
Making sure that every person over the age of 62 knows about reverse mortgages when going in for a meeting with a loan officer at Fairway is a priority, but so is the concept of introducing a reverse mortgage option prior to the point that a client might qualify for it. That way, a loan officer and client can map out how a reverse mortgage could be incorporated into a longer-term plan when the time is right, Accola says.
“Even for the people in their 50s. When they’re making a decision as to whether or not to go with a 15- or 30-year mortgage. They’re going to refinance right now?,” Accola says. “If I’m 50 years old, and I’ve got 12 years left before retirement, should I go with a 15 or a 30? Because if I’m maybe going to do a reverse at 62, how should I plan on doing a refinance when I’m even younger? We’re trying to kind of infiltrate that information of the overall mortgage financial plan into every aspect, and [do so] fairly.”
While acknowledging that the reverse mortgage industry has been experiencing growth through 2019 and 2020, there is still a long way to go in terms of getting the product where it should be in terms of the amount of seniors that could benefit from the reverse mortgage category, Accola says.
“I don’t think we’re even 10% of the way there [in terms of adequate product education], the results speak for themselves,” Accola says. “I’m not trying to be pessimistic about it. We’ve got a long way to go to educate the public, advisors, homecare places, attorneys, along with of course financial planners and realtors. It’s sad, we just have not had enough outreach, and then people go out and try to educate and get rebuffed because they don’t want to hear about it.”
Once the educational process becomes more robust industry-wide, that will likely lead to more inbound product inquiries from a wider array of trusted advisors and loan volume may start to reflect the potential of the product, Accola says. But in order to achieve that goal, a frank assessment of where the industry currently stands on the educational front is essential.
“Once the education gets out there and the tipping point happens, then everybody will want to know about [reverse mortgages],” Accola explains. “But right now, we’re not even 10% of the way down the road on education.”
Listen to the latest episode of The RMD Podcast for the full discussion with Harlan Accola.