A tough reverse mortgage market in 2022 was punctuated at year’s end by sharply reduced volume and the exit or consolidation of some of the industry’s biggest lenders. In turn, reverse originators across the country have been on edge. However, when RMD reached out to originators at the close of last year, many maintained either outright or cautious optimism.
Now that 2023 is upon us, RMD reached out to originators across the country to learn how they plan to weather the current market environment and find out what they’re doing to keep business moving forward. For Rich Pinnell of Primary Residential Mortgage, Inc. (PRMI), it comes down to getting back to the basics.
Referral partners and the economy
Industry advertising has not been as prevalent as it was during the pandemic, and Pinnell has noticed that it’s harder to get word out about reverse mortgages across his community. That’s where his longtime referral partnerships have been beneficial. After enduring lull in business in late 2022, he says phones are ringing again.
“I think people have just said this thing is going in the direction everybody thought it was,” Pinnell said in reference to the economy. “We’re going to have to deal with inflation, so maybe we better just lock in what we can do now because we don’t know where we’re going to be in 12-18 months. And the fact that rates are slightly better right now doesn’t hurt. So people can see that it would be a good time to do it if they can get enough money out to accomplish what they need to do.”
Frustration is bound to run high when professionals find themselves less busy than normal, but that’s why it’s important to revive what has worked in the past, he said.
“You go back to the basics,” he said. “Whenever the market goes into an area that we’re not sure about, my philosophy has always been — whether I was in this industry or some other industry — go back to the basics. Give people what they need and what they want. Go see your partners more often if you can.”
Pinnell has noticed a slowdown with his referral partners in terms of introducing other options to their clients — largely due to economic uncertainty. Still, making your presence known to your partners could help solve other issues their clients could have, which could lead to more business.
“I think you [need to] make sure that that your referral partners know what’s going on [in the business], and know that the product is still there,” he said. “Sometimes it takes a different client with more equity to make it work.”
A need in the current economy
One cause of the reverse mortgage business boom early in the pandemic was that the economic uncertainty led more people to consider the product. With the inflation currently impacting living costs, Pinnell believes that needs-based clientele could start calling in the months ahead.
“People that really need a product like a reverse mortgage [might end up] in a situation where maybe they’ve gotten a little behind in their bills,” he said. “And then financial assessment brings its ugly head up, and maybe we have some more LESAs coming out in the marketplace because somebody missed their property tax payment at the end of last year.”
There are also instances in which Pinnell may have spoken to a prospect who didn’t end up moving forward. If situations change, however, they may get back in touch.
“I think more and more, we’ll see people sitting home thinking they talked with me a year ago, and wasn’t ready to do it then,” he said. “Now, maybe they should take another look at that. I expect once the bills settle in, and once anybody with a HELOC starts watching that interest rate climb every month, we’ll see some activity in the marketplace that will be helpful.”
Borrowers are also feeling pressure from the broader events in the industry. After Reverse Mortgage Funding (RMF) filed for bankruptcy and sent letters out explaining that borrower loans would be unaffected, Pinnell still fielded calls about the potential impact the lender’s exit would have on them.
“So even though the letter said it had no effect on them, they wanted somebody they actually knew to answer that question,” Pinnell said. “And hopefully, they trusted me to give them good advice. So, there was some of that business going on in late December. We just do what we always have, we were just talking to people and making them comfortable with where they were.”
Reconnecting with past prospects
Pinnell also decided to go back to a majority of the people he has talked to as a reverse mortgage professional and sent them a personalized email over the holidays. It took time, but he found it a worthy exercise to remind people that he and his product are around if needed.
“I’ve sent personal emails to everybody I’ve talked to, whether I did a mortgage with them or not,” Pinnell said. “I just sat down over the holidays, and I didn’t just do one and do a mass email blast. I hate those things, because you can tell what they are. I actually sat down and typed out individual messages to each person.”
He got a promising reply almost instantly from a woman he had spoken with prior and had since decided to look into a reverse mortgage once again.
“She fell while she was vacationing in Europe, so that took her out of the mix for 90 days,” Pinnell said. “But she got [my message] and immediately responded to me and said she needed to call me. Now, would that have affected the outcome if I hadn’t sent that? Probably not, since she didn’t have anybody else she was working with. But the fact of the matter is I opened the door and made it easier. She didn’t have to go find my email or my phone number.”