It’s a well-known norm in the reverse mortgage industry that product education is key to expanding the understanding of reverse mortgage products, whether talking about a traditional Home Equity Conversion Mortgage (HECM) or proprietary offerings. Educating consumers as potential borrowers is key, but it’s also very important to inform those on the other side of the proverbial “fence” in the mortgage business about the opportunities that could be present in the reverse business.
Last week, the Florida Association of Mortgage Professionals (FAMP) held its annual convention and trade show in Orlando. Primarily geared toward a forward audience, there nevertheless was a reverse mortgage presence, most notably by Finance of America Reverse (FAR). Speaking at the event in an effort to educate the primarily forward personnel about the business possibilities of engaging in the reverse mortgage space was Lorraine Geraci, vice president of learning and development at FAR.
She gave a presentation, titled “The Next Level of Sales in Reverse,” to a skeptical audience of forward mortgage industry participants, and related positivity when seeing how they reacted to what she had to say about a new potential business segment.
Reverse education and reception
One of the keys that Geraci has found useful in educating skeptical audiences about reverse mortgages is by offering information about the realities of retirement, a normal condition of working in reverse, but not necessarily in the forward space.
“When you’re talking to salespeople, no matter what they’re selling, [you need to] provide a lot of different ways to explain the same story or you’re going to lose people,” Geraci told RMD in an interview. Simply going into a presentation to relate information about reverse mortgages from experience doesn’t necessarily make an audience interested in what will be discussed, Geraci says.
Instead, relating information about what people want out of their retirements before offering up the statistics to substantiate the need for a reverse mortgage product is often a better strategy to use for an audience of forward mortgage professionals. After the statistics, then the applications can be discussed, which is when the specter of common product misconceptions can begin to be combated.
“After I explain statistics, we go into how reverse mortgages [can] help these folks achieve their retirement goals,” Geraci says. “Most of them don’t realize those applications. They say that they thought it [consisted of] giving up the title to the property, or that it was only for people that are poor and destitute.”
Geraci then describes how FAR sets itself apart as a reverse mortgage partner as a final “bow” on the presentation.
The oncoming wave of retirement issues
In a conference environment, the actual presentation is often only a first step. The next step is the direct interactions that take place on the floor during the rest of the event, and the conversations that can arise from both skeptics and the people intrigued by what the reverse product can do. The questions Geraci received after her presentation in Orlando ran the gamut between both.
“There were a few people in the audience that were understanding of how reverse mortgages worked, and some of them had actually done reverse mortgages during their careers, and had really positive things to say about [them],” she says. “Others were inquisitive. They didn’t realize that there was an opportunity for a line of credit growth, they didn’t know that financial advisors were really starting to engage heavily in understanding how this product can help their clients so they don’t have to liquidate their portfolio assets in their retirement.”
Ultimately, one of the most effective pieces of information Geraci discussed in her presentation was related to the country’s shifting demographics, and the immediacy presented by them in terms of solving issues for clients related to their retirements. According to U.S. Census Bureau data compiled by the Population Reference Bureau, the percentage of the American population made up by people at or over the age of 65 is projected to reach 23 percent by 2060.
“[We wanted to] let people understand the opportunity that was there for them, and the fact that this is such a growing need,” she says. “There’s going to be almost a quarter of the population over the age of 65 in the next coming years. That’s a huge amount of people. Many of those people are homeowners, and many of those people have not financially prepared for having the retirement that they want.”
Battling common misconceptions, finding encouragement
While the common misconceptions are certainly present on the floors of forward mortgage conferences, Geraci says that the kinds of misconceptions people have about reverse mortgages varies based on the kind of event she attends, with mortgage bankers in particular largely viewing reverse mortgages as a last resort. Changing that way of thinking is a priority. While there is still progress that is yet to be made, that doesn’t mean that some hasn’t been made already.
“We are making headway, because I do see more and more people that are advocating for [reverse mortgages],” she says. “They say they used to be skeptical, but once they get involved and learn about it, it completely changes their entire focus. So, we need more of that kind of stuff, and I think that time will tell [how successful we are].”
Overall, Geraci feels encouraged by the general reception to her presentation at this event, an at others she has attended, she says.
“I think it was very positive,” she says. “These forums give us an opportunity to showcase all of the services that Finance of America has, but when it comes to the reverse space, we’re really proud because we’re the number one wholesale lender. That’s where our niche is, and brings people to us to learn what separates us from everybody else.”
By focusing on retirement needs and relationships with people to help achieve their goals, finding greater acceptance for the financial tools offered by FAR and others will help the industry achieve greater acceptance among a wider degree of financial professionals.
“So, I think that’s the way that we’re all going, and we’ll see what happens,” she says.