Reverse mortgage professionals are feeling the challenge now that business has receded from the recent highs. But according to Atlantic Coast Mortgage’s Laurie MacNaughton, when times are tough, it’s a matter of going back to your own strengths.
MacNaughton spoke with RMD about how she’s keeping business moving in Washington, D.C. For MacNaughton, it comes down to knowing her personal strengths and finding ways for business to benefit from her skills.
Heading off a slowdown
When the reverse mortgage business nationwide started recording volume losses, MacNaughton said she didn’t notice right away because she had a robust pipeline.
“I’m still closing up some of that pipeline,” she said. “But as far as new originations go, yes, things started to slow down as rates went up. The group that fell off were the people who were doing pre-planning.”
Customers who engage in pre-planning generally tend to have greater means, she said. In turn, the slowdown for that group likely came from financial advisors observing market activity.
“There’s a group I call my ‘hyper-qualified,’ and these people could qualify for any type of loan,” she said. “They were following long-term advice: engaging in a reserve reverse mortgage, and then just sitting on it and waiting for appreciation. But as rates went up, I think a lot of financial advisors really cooled on that idea. So the hyper-qualified clients I saw fall off.”
Serving needs-based clientele
Much of MacNaughton’s business comes instead from needs-based clients, particularly those who are trying to minimize the impact their passing may have on friends or family.
“Many of these come over as attorney referrals, or their adult children have realized that if mom runs out of money, they’re up to bat,” she said. “They’re going to be bankrolling their parent’s very last chapter of life. Until we stop, as a species, getting old and sick, there’s always going to be a need for reverse mortgages. The biggest issue becomes if that same person had gone into the local bank earlier, and taken out a large line of credit.”
In this scenario, rising rates made a reverse mortgage solution impractical, she said. That likely had the biggest impact on MacNaughton’s pipeline, so in situations like these, she tries to “review” what has typically worked best for her.
Knowing your strengths as a path forward
MacNaughton also tries to apply the theme of getting back to basics to her skill set and market.
“I have long said that I’m really only good at two things: writing and teaching,” she said. “And so, my entire business has been focused around the two things I’m good at. I do a lot of writing for newsletters, magazines and a little blog. A lot of my clients find me through publications. I do writing for attorneys, financial advisors, and so forth. And then I do a lot of teaching for real estate professionals, financial advisors, and attorneys.”
That also led her to develop a class for attorneys offering continuing legal education. While new opportunities haven’t necessarily stemmed from this, putting the focus on where her clients are has always contributed to business, she said.
“I know people who are fantastic on the phone, just great at outbound calls and social media,” she said. “I’m not [good at those things]. I do keep an online presence and put stuff on Facebook, LinkedIn and Instagram, but I don’t like the brevity of [social media]. A lot of my clients aren’t really inhabiting that space, nor are my attorney partners extensively.”
However, one of the ways she stays engaged with some of those online platforms, which has captured business in the past, is through content creation on YouTube.
“I do place little reverse mortgage cartoons I make on YouTube, and those are very long-lived,” she said. “Those have longevity, and last until you take them down. So that’s been a good medium for me for probably for 10 or 15 years. I’ve put tiny, lightweight explainer videos on YouTube, which is part of doubling down on my strengths.”
New HECM limit makes loans work
As of January 1, the Home Equity Conversion Mortgage (HECM) limit has risen to over $1 million. While some professionals have questioned how beneficial that could be for their businesses, MacNaughton welcomes the higher limit in her market. The average home is worth around $700,000 in Washington, D.C., according to Zillow.
“The [new HECM limit] in this area has helped so much,” she said. “There are deals that just simply wouldn’t work [before the new limit] because the existing loan balance was too high. And now with the higher loan limits, some of those people I can call back and say ‘I told you I’d keep an eye on your numbers, [and now they] look great.’”
MacNaughton typically converses directly with her referral partners as opposed to seniors. After reaching out to certain referral partners about the higher HECM limit, they appear to be more receptive, she said.
“Has the higher limit helped me to get more business? Not precisely,” she said. “It’s helped me to make loans work that my referral partners, like elder law attorneys or financial advisors have brought to me.”