When Curtis Mangus of Premier Mortgage Resources in Meridian, Idaho looked into pivoting into reverse after serving decades in the traditional mortgage business, he asked his managing partner at the lender about its reverse mortgage department. The partner smiled.
“You are the reverse mortgage department,” he said.
Mangus then worked to build the dedicated reverse mortgage department at his new company from scratch and has found a notable degree of success by building Home Equity Conversion Mortgage (HECM) for Purchase (H4P) business through the use of continuing education (CE) classes designed for licensed real estate agents. The result is that H4P business has become a notable share of his total business.
Since H4P volume is only a small fraction of the total business done in the reverse mortgage industry based on 2021 data, Mangus sat down with RMD to discuss his approach in successfully cultivating H4P business.
1% of the national HECM for Purchase total
Understanding the reality of national H4P business is key to contextualizing the success Mangus has had in his own business, he explains for RMD.
“Of the six million home purchases done in 2021 only about 2,200 of them were H4P,” he says. “The product is not even on the radar screen for [real estate] agents. I closed 28 H4P transactions last year, over 1% of the national total. My market share in this area continues to grow steadily even though on a national level it is stagnant or even declining.”
Mangus began teaching CE classes designed for real estate agents around 2011, as the mortgage industry was still finding ways to fully recover from the 2008 financial crisis. Touching on the reverse mortgage topic in one of these classes proved to be a difference-maker for him, he says.
“Over the years I ended up teaching classes on renovation loans, mortgage insurance, mortgage mechanics, etc.,” he says. “Then about six years ago, I taught a class on government loans and included a class section on reverse mortgages, and things have never been the same.”
His reverse loan production accelerated when walking his referral partners through the intricacies of a reverse mortgage, but says that more specific interest was derived from discussions specifically about H4P.
“When I started teaching this section on HECM for Purchase, I could not get the agents to talk about anything else,” he says. “I subsequently have developed two more CE classes that only deal with HECM loans. In the last six years, my HECM production has steadily grown.”
In 2020, his personal loan production broke 100 units, and increased by an additional 25% in 2021, he says. 60% of his volume comes from traditional HECM loans, 20% came from HECM for Purchase, and the final 20% from HECM-to-HECM refinances, he says. The key difference in the acceleration of his business has been in offering the CE classes to referral partners, most specifically real estate agents.
The power of CE classes for referral partners
The idea of creating CE classes is not a new one, Mangus says, and it does not only work for one type of partner like real estate agents.
“CPAs, attorneys and financial planners also need CE credits as well,” he says. “If you’re able to provide value in a CE class, I believe this strategy can work with most financial professionals [to increase reverse mortgage business]. Real estate agent CE classes are required in all states, but unfortunately there is not much uniformity between states.”
Mangus has had CE classes approved in seven states, he says, and there is not much crossover in the content when comparing the variations offered in the different states, he explains.
“If you’re a reverse mortgage professional interested in this marketing strategy check with a few of your agent friends, and the state real estate board on what it takes to be a CE instructor, and get a CE class approved,” he recommends.
For anyone interested in putting such a plan into practice, Mangus has a series of “tips” that professionals can use to develop their own class offerings in their specific localities, particularly if H4P is a business segment sought for expansion.
“The first tip is to teach the H4P section first since this will keep the agents engaged when they find out they can actually get a paycheck from the loan,” he says. “Be sure to keep the H4P section and the refinance section completely separate. Their heads will explode if you don’t.”
Mangus also says that practicing delivery is key, describing that even having taught over 200 classes himself, different audiences will not react uniformly to the information. Practicing delivery will ensure clear and concise communication of detailed reverse mortgage information. Stories and anecdotes that help to contextualize the information also assist in comprehension by attendees, he explains.
When telling those stories or anecdotes, anything directly related to H4P can provide a boost to both understanding and enthusiasm, he says.
“One rhetorical question I use tends to sum it up: ‘who doesn’t want to buy a house for half, and then never make a payment?,” he says.
Connecting a reverse mortgage to a retirement strategy
Reverse mortgage professionals are all too familiar with the potential illustrative power of tying the product to a comprehensive retirement strategy, especially as retirement in America comes under further strain based on attributes like rising debt levels and dwindling retirement savings. Making a direct connection between reverse mortgage subject matter and the generally risk-averse nature of financial professionals can be helpful, Mangus says.
“Tie the class into a retirement strategy. This is a lesson I learned the hard way,” he says. “Showing people how they can extract equity out of the house is not nearly as effective or impactful as tying the use of the product to a larger retirement strategy. Be sure to address the myths related to ‘not owning the home’ or ‘signing over the equity to the bank’ early on in the class.”
Connecting with the professionals you teach on an ongoing basis is also critical to the potential for future success, Mangus says.
“You need some kind of contact management system (CRM) to feed real estate agents from class, and potential clients into,” he says. “This is part of the long-term strategy to make you, as the instructor, the trusted advisor in your market on anything having to do with the HECM. Very often the customers and agents will take months, if not years to come around. Staying in constant contact is crucial to long-term success.”