A reverse mortgage professional is someone who works with a very specific financial tool that is very detail-oriented, which usually translates into local communities having only a few dedicated product professionals. This is something that can be harnessed as a major component of a reverse mortgage professional’s business strategy, depending on the willingness of a certain businessperson to put in the time and effort to become a local community’s essential reverse mortgage resource.
This is according to Ken Krajewski, VP and head of reverse mortgage lending at 1st Nations Reverse Mortgage based in Southfield, Mich. Krajewski shared his insights for operating in local communities in a recent webinar hosted by RMD, “How Community Banks Can Serve as Reverse Mortgage Referral Partners” held in June.
Becoming an indispensable reverse mortgage resource
Competition among reverse mortgage professionals in many local communities across the country can be few and far between depending on where someone is located. Of course larger organizations that can do things like advertise on television may have an advantage and capture a borrower through a call center, but in terms of “boots-on-the-ground” business, a retail originator can find options if they go out and leverage contacts in the community, Krajewski says.
“[Reverse mortgage pros] don’t [always] have a tremendous amount of competition in your local area,” he says. “There’s always competition on TV and on marketing, but really [when it comes to] salespeople who are committed to selling reverse mortgages exclusively, there aren’t a lot of people out there that are actively doing that. So, what I try to talk to people about is finding the best thing or the best way that you can create a brand for yourself locally in your community, and how you can get your business up and running pretty quickly.”
Community banks specifically can serve as a major source of local business, but that is not to say that such a route is barrier-free, Krajewski says. Those barriers, however, can be navigated if the audience at the bank demonstrates receptivity to a reverse mortgage.
“When you’re trying to get business from community banks, I can tell you a couple things right off the bat: a lot of times, bigger banks may have some sort of barrier that doesn’t allow their salespeople – their loan officers or people in the branch – to refer business out to reverse mortgage people,” Krajewski explains. “And that is more on a macro level. If you can get into an individual branch, a lot of times those branches will make the rules themselves. They’ll allow you in the door, and they’ll listen to you. And once you can get your foot in the door and you can gain that relationship, you’re probably going to be the only reverse mortgage resource that they have.”
Reasonable or appropriate lending
A hot topic in the world of banking right now, Krajewski says, is determining what kind of loan product is “reasonable or appropriate” for a particular consumer. Looking at many products that banks of all sizes offer could present a potential opportunity for a reverse mortgage professional, considering the variety of loan products that are most commonly offered by banks directly tends to leave out senior homeowners who could most benefit from a reverse mortgage, he says.
“I wrote a list of loans that are out there for residential borrowers, and I’ll run through them real quickly,” Krajewski begins. “There [are loans for] first-time homebuyers, no-doc/low-doc construction loans, fixed loans, [adjustable-rate mortgages] (ARMs), [home equity lines of credit] (HELOCs), home equity loans, FHA, VA, USDA, jumbos, doctors’ loans, bridge loans, balloon loans, and interest-only loans. That is what most banks have in their menu of products.”
The general omission of a loan product that could most optimally serve a senior homeowner naturally stands out to a reverse mortgage professional, Krajewski explains.
“What’s interesting is that once somebody becomes a senior citizen, they don’t have a product for that person anymore, and it is unfortunate,” he says. “They’ve got a product for virtually everybody out there except for the older homeowner. And from my perspective, anybody walking into a local community or national bank that’s 70 years old should not be walking out of there with a 30-year fixed mortgage.”
Pointing this out to someone who works at a local bank in particular, in a branch which sets its own rules regarding potential referrals, could prove to be a source of business for a reverse mortgage professional, he says. This is especially true in a community setting where a bank is keenly aware of the borrower and his or her situation, and wants to find something that could be the right fit for a specific situation.
“When it comes to appropriate, reasonable or responsible lending, I do believe that there are a lot of people in banks that would like to, or would rather offer a reverse mortgage – or, offer an option to get a reverse mortgage elsewhere – than put somebody into a 30-year fixed mortgage who’s 75 or 80 years old,” Krajewski says. “And then, that’s where we can come in.”
Participation is the name of the game
A big catalyst for someone to become that reverse mortgage resource not just for the clients but for the banks themselves involves getting more visibly involved in the banking, realty and mortgage organizations and associations which are most prevalent in the community, Krajewski says.
“What I would say to get your foot in the door – whether it be at community banks or even at national banks – an easy thing to do is get involved in realtor events and get involved in associations,” Krajewski advises. “Whether it’s the local Realtor association, the Mortgage Bankers Association, the Mortgage Brokers Association, there are larger and smaller associations in and around your area. And I can confidently say that in most of those, you will be the only reverse mortgage person there.”
Even when it comes to those kinds of association events, reverse mortgage professionals are still likely to be relatively few and far between, Krajewski says.
“The idea of walking into a Mortgage Brokers Association or bankers association event, and being anything from a forward mortgage loan officer, to an insurance representative, a title agent, those events are saturated with those vendors,” Krajewski says. “And when it comes to selling or talking about reverse mortgages, you’ll probably be the only person that’s there that is doing that. And if you’re not the only one, you’re probably one of two.”
Having that specialty could help to further engage people at such an event, whether because of product curiosity, interest or even education, he says.
“There’s something about reverse mortgages that I think people find interesting, and even a little bit fascinating,” he says. “They have an idea of how it works, but it’s typically not accurate the way they first explain it. And then as you’re explaining it, you’re showing its value to them, and you’re showing them why it’s important.”