Sometimes the closing process can be a difficult one for reverse mortgage loan officers to navigate, whether because of issues that the borrower might have with the process or the intricacies that need to be closely followed to actually get a loan through everything that needs to be done. This is why a pair of reverse mortgage industry professionals with expertise in this area offered some ways for originators to navigate some of these issues at this month’s National Reverse Mortgage Lenders Association (NRMLA) Eastern Regional Meeting in Baltimore, Md.
Allegiant Reverse Services VP Tina Meilinger and Notaroo COO John Connell offered perspectives informed by what they’ve seen in the field to the assembled audience of reverse mortgage professionals at the event, hoping to work toward smoothing out some common issues that LOs may run into over the course of their work.
Issues with borrower perspective
From the perspective of escrow and signing agents, Connell began the discussion by asking Meilinger about the most common issues that can be encountered from the perspective of the borrower during these processes, and she was quick to point out that educational shortcomings about the product could be problematic at this point in a loan’s early life.
“We’ve been in the business a long time [and have] many years of experience working with multiple borrowers,” she said. “Not understanding the product, first and foremost, and the fees that go along with it is probably the key element that goes into [the issues we see]. What’s their draw amount, what’s their monthly payment? Where do they find the information in reference to this? Why is it that a reverse mortgage has two notes? Those are common questions we get often.”
Confusion can also arise related to the terms of the loan, the line of credit and the type of rate it has, Meilinger explained. Funding timelines can also be common sources of misunderstanding.
“We still get calls consistently on funding timelines,” she said. “We talk to the borrower about a three-day right of rescission, and they all understand that. But they really need to understand what could stop those funds from being dispersed. Many questions are stemmed from when the future is set up in their line of credit, and when they can draw from that.”
Conversations can also focus on how the HUD credits and closing costs will work on the product, and where sources of delays can emerge from when it comes to actual disbursement of proceeds.
“Once the file is actually funded and is going into disbursement, there can be delays,” she said. “That’s predicated on whether or not there were closing conditions, and if we needed to call the borrower back and ask for additional information. Is the lender funding later in the afternoon as it comes into us? That’s going to cause a delay in the borrower’s funds. [Those are] probably the most common questions that we get in the industry.”
What an originator can do
Connell then moved to ask about steps that originators might be able to take to help address some of these issues. The first thing that Meilinger cited as a possible help was addressing any misconceptions or misunderstandings that could arise from the back end of a reverse mortgage.
“The back end is the critical side of the story, because that’s the remaining picture in their mind [regarding] how the transaction went,” she said. “This is where their money comes into play, so it’s near and dear to their heart. Ensuring that they’re well-educated on the product and the documents and making sure that you keep active communication with them consistently [is key].”
It’s also important for originators to let their borrowers know who they will be dealing with on the back end, along with how and why people serving that side of the loan obtained a borrower’s contact and loan information.
“That way, when we call them, they fully understand and they’re not caught off guard,” she explained. “If the loan officer takes the time to explain to them what the process is, and why this will help the borrower in the long run, [they will] understand the product and be comfortable with the finished process.”
Empathy through the closing process
Meilinger then asked Connell about steps that can be taken to improve the borrower’s experience during the closing process, and the first thing he pointed to was keeping the demographic in mind and relating the borrower to someone the loan originator may know.
“When I think about this — and I think about it as we are setting up the right signing agent for this — you want to think about it as though this is your own family,” he said. “That you’re trying to arrange this for your grandmother or your mother. Think about it in those terms of empathy and care that’s going into this. Understanding that, many times, [a borrower may] struggle with understanding exactly who this is and who all the parties are that are involved in this process. We [need to] demonstrate that empathy through the process.”
That empathy can also be sufficiently demonstrated in the level of access a borrower will have for their loan originator, he explained.
“Many times we have a situation where maybe [a closing] gets booked late at night or on the weekend, and it’s difficult for us to be able to get back to the loan officer to be able to address questions,” Connell said. “So sometimes, we’ll leave the signing table with some of those questions remaining unanswered.”
Borrowers can also show signs of additional anxiety if they are unable to remain in contact with their LO, so giving them peace of mind regarding any concerns they have and the originator’s ability to address them can make a notable difference, Connell advised.
“Provide a [schedule of] availability and accessibility, and make sure that your borrower understands [you will] be there for them through this process,” he said. “[Tell them if they] have any questions, [you’re] a phone call away if you’re not able to be there physically for that signing. That makes a tremendous difference in the process.”