Still feeling the impact of rule changes to the reverse mortgage industry applied by the Department of Housing and Urban Development that went into effect on October 2, 2017, as well as an influx of new proprietary reverse mortgages, originators find themselves having to take a different approach concerning their business relationships with their referral partners in order to bring all involved parties up to speed with the relevant product changes.
Originators now have to contend with new realities in light of retraining their referral partners on the product changes, including some new specific associations between originators and partners and adapting to new sets of rules and combating misinformation and disorientation that naturally arises out of a major industry shift in policy.
“[The rule changes] really gave our business a knockout punch, there,” said Mike Peerless, Reverse Mortgage Director at Holland Mortgage Services in Ormond Beach, Florida, with respect to changes in principal limit factors and mortgage insurance premiums. Still, in spite of that, Peerless says that he’s still largely able to work with the same professional partners.
“The same referral sources will still send me business. I do explain to them that things have changed, and that less people are qualifying for [reverse mortgages]. They understand that, but they still have faith in it,” he told RMD.
He also talked about the legwork he does in maintaining relationship bonds with his referral partners.
“I belong to the local board of Realtors, and go to functions and do presentations for them, and they trust me enough to give the referrals to me,” he said. “They know that there’ve been changes since last year, but they don’t hesitate to give me a referral. They know that I’m going to do what’s right.”
“I have a local newspaper column, and I’ve devoted a couple columns to guideline changes,” said Laurie MacNaughton, a consultant and originator for Atlantic Coast Mortgage in Virginia.
She takes advantage of her background as an educator to communicate the realities of the rule changes through a number of different channels, in addition to targeted emails. “I send [them] out to certain sectors [like] attorneys who are dealing with conservatorships, [since] they need to know ahead of time whether this is something that’s going to be worthwhile to recommend to their clients, and real estate professionals. […] So, I have very sector-specific outreaches.”
This is exactly what originators should be doing, according to longtime reverse mortgage industry expert Shelley Giordano of the Funding Longevity Task Force at the American College of Financial Services.
“The originators who are successful today, and in 2015-16 are successful because they’re self-actualizing,” she told RMD. “They’re not sitting around waiting for the phone to ring, they’re out there building relationships, building their value, and building the value of the HECM again and again.”
She also added, “If you don’t do stuff, nothing’s going to happen!”
MacNaughton told RMD that it’s not the job of the referral partners themselves to stay up-to-date with the specifics of the reverse mortgage rule changes, and so they shouldn’t be expected to be keeping up with the shifts the same way that originators do.
“How otherwise could they know? Nobody is waking up in their busy professional day asking, ‘I wonder if there are any changes to the reverse mortgage program!’” MacNaughton said. “Even people who are vaguely aware that there’ve been changes aren’t going to read the details. That’s my job: to apprise them of those changes.”
MacNaughton also shared that when it came to reacting to the rule changes and what they would mean for prospective HECM clients immediately after they were handed down, she had to move quickly, and that it’s an ongoing process even more than a year after the changes were first announced.
“As soon as I took the old quoting tool numbers and reloaded the new ones, it was just flamingly apparent that this was going to be something we have to get the word out [about] very quickly. And, you don’t deliver a message like that [in] one fell swoop, you have to say it again and again. So, I’m continuing to get the word out.”
Peerless also related that in terms of the rate changes and other consequences stemming from the new standards, honesty is the best policy.
“With our clients, I lay out the truth to them and tell them that this is the way it is, and if it’s not right for them, we let them know that. We’re not going to put them into something that we don’t think is going to work,” he said.
Written by Chris Clow