The Reverse Review - January 2012
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The Last Word
Rob Awalt -
January 2012
Read the issue here! -
FEATURE: Reverse Course: The Changing Public Policy Landscape of 2011 and the Year Ahead
Emily Vannucci -
Underwriting
Ralph Rosynek -
Originating
Ken Kanady -
Secondary Market
Darren Stumberger -
Legislative
Christopher J. Willis & Mercedes Kelley Tunstall -
Servicing
James Wright -
Appraising
Charles Gress -
Ask the Appraiser
Bill Waltenbaugh, SRA -
Spotlight Article
Jim Milano -
The Last Word
Rob Awalt -
January 2012
Read the issue here!
Simplexity- Making The Complex Reverse Mortgage Simple To Understand
Last Updated on Thursday, 18 February 2010 17:21 Written by Denis Haber Friday, 01 May 2009 15:57
Paradoxically, it has been suggested that compared to reverse mortgage professionals, doctors have it rather easy. The doctor is required to obtain the informed consent of the patient prior to performing a procedure/surgery. All they have to say is, “if you consent to this operation you will be like new and the risks are such and such but you will be able to do things you currently cannot do”. They do not describe every incision, every step, or every procedure. They don’t even describe how the anesthesia works. However, those of us in the reverse mortgage program have to describe how everything works. Therefore, unlike the doctors, knowing that the ultimate result will be OK is simply not enough. We must be able to walk the borrower(s) through the minutia, while making it easy to understand. After all, an expert is one who can make difficult things understandable. This article assumes that the loan officer has both character and competence; integrity and knowledge and loves the business. Today the reverse mortgage loan officer is working under extremely challenging times and conditions. A reverse mortgage loan officer from years ago would find today’s landscape unrecognizable. The industry has changed from a static, simple, one size fits all model, where every lending institution offered the same set of programs with matching interest rates, indices and margins to an ever changing, fluid model, where the program menu differs from lender to lender.
For example, some lenders may offer LIBOR index rate programs, while others may offer only CMT index rate programs. Yet some lenders may offer programs with either index. The margin offerings will be different as well. Maximizing profits and achieving that evanescent competitive advantage requires an ever-evolving game plan. This strategy now requires that the entire company including its loan officers execute the game plan flawlessly. These competing factors require that the loan officer have a greater comprehension of reverse mortgage nuances. At the same time, the reverse mortgage professional must master these nuances, so he/she can maintain equanimity in the face of a depreciating asset death spiral that has left so much emotional and economic detritus in its wake. More than ever seniors crave the delivery of simple and complete information. This is the one thing that the industry does not provide. Like many industries, this industry also suffers from the follow the leader syndrome. Everyone seems to copy what everyone else is doing. Therefore, there is sameness about the commercials, the advertisements, and even the brochures. How many times have borrowers told you that they liked your marketing piece and it
turned out that it was your competitor’s piece. This article will not explicitly cover or discuss the recent vagaries of the secondary market; nor the actions of an intractable Fannie Mae. For the most part, each is outside the scope of this article. What is addressed is how the loan officer can take a complex program and make it simple to understand. The tour through “reverse mortgage land” first requires that the loan officer create an environment where trust can thrive. Sincere bonding and rapport needs to occur. Remember, people don’t care how much you know until they know how much you care about them. You cannot fake this. Once this happens it is there forever. A typical way that this will manifest itself is when your borrower receives 5 or 10 different mailings from other reverse mortgage companies and calls you for guidance. Or three or four years after meeting you, this same borrower calls you to tell you they are now ready to proceed. If examples like this have not happened to you, it is time to ask why. It is so important to be able to see things as your borrowers see them. This requires that you ask incisive questions. It is imperative that you set proper expectations for your borrowers. Presenting in a way that your borrowers can soak up your information like a sponge is also key and understanding that the real decision is not whether the borrowers obtain a reverse mortgage, rather who is chosen to assist the borrowers in obtaining same. Encouraging the borrower to ask questions, lots of questions along with a frank discussion about alternative actions is quite important as well as the relationship the loan officer chooses to have with borrower. For example, if the borrower is treated as a customer, the customer becomes another number and is typically told anything to get them to act. On the other hand, if the borrower is treated as a client, then the focus becomes what is best for the borrower. The two views couldn’t be more different. So how do you treat your borrowers? The only way is as a client. After providing an initial safe environment for your borrowers, you will be further judged by your ability to tell the reverse mortgage story using the comparison sheet, amortization schedule and TALC as your guide. The narration really begins with the comparison/estimate sheet. This document tells a rather intriguing story. Actually, when done right, it tells two stories. First, it introduces the listener (borrower) to the concepts and terms that form the linchpin of understanding. If you cannot make a complex topic easy to understand, your story will have no point. Second, this story will become magical when the comparison/estimate sheet simplicity is coalesced with
your borrowers’ personal perspectives. Magic is achieved when your borrower can see himself/herself woven into the happily ever after part of the tale.
turned out that it was your competitor’s piece. This article will not explicitly cover or discuss the recent vagaries of the secondary market; nor the actions of an intractable Fannie Mae. For the most part, each is outside the scope of this article. What is addressed is how the loan officer can take a complex program and make it simple to understand. The tour through “reverse mortgage land” first requires that the loan officer create an environment where trust can thrive. Sincere bonding and rapport needs to occur. Remember, people don’t care how much you know until they know how much you care about them. You cannot fake this. Once this happens it is there forever. A typical way that this will manifest itself is when your borrower receives 5 or 10 different mailings from other reverse mortgage companies and calls you for guidance. Or three or four years after meeting you, this same borrower calls you to tell you they are now ready to proceed. If examples like this have not happened to you, it is time to ask why. It is so important to be able to see things as your borrowers see them. This requires that you ask incisive questions. It is imperative that you set proper expectations for your borrowers. Presenting in a way that your borrowers can soak up your information like a sponge is also key and understanding that the real decision is not whether the borrowers obtain a reverse mortgage, rather who is chosen to assist the borrowers in obtaining same. Encouraging the borrower to ask questions, lots of questions along with a frank discussion about alternative actions is quite important as well as the relationship the loan officer chooses to have with borrower. For example, if the borrower is treated as a customer, the customer becomes another number and is typically told anything to get them to act. On the other hand, if the borrower is treated as a client, then the focus becomes what is best for the borrower. The two views couldn’t be more different. So how do you treat your borrowers? The only way is as a client. After providing an initial safe environment for your borrowers, you will be further judged by your ability to tell the reverse mortgage story using the comparison sheet, amortization schedule and TALC as your guide. The narration really begins with the comparison/estimate sheet. This document tells a rather intriguing story. Actually, when done right, it tells two stories. First, it introduces the listener (borrower) to the concepts and terms that form the linchpin of understanding. If you cannot make a complex topic easy to understand, your story will have no point. Second, this story will become magical when the comparison/estimate sheet simplicity is coalesced with
your borrowers’ personal perspectives. Magic is achieved when your borrower can see himself/herself woven into the happily ever after part of the tale.
Therefore, before the story can begin, the loan officer must also be intimately familiar with his/her borrowers’ concerns. The importance of seeing things through the eyes of you borrower becomes key. A story without all the facts cannot become magical and will not lead to a specific outcome. Furthermore, you cannot start the story unless and until you know what keeps your borrower up at night. Circumstance, wearing the black hat, has driven our elders into financial despair. Oft en one will hear, “If only I had known I would live so long, I would have done things differently.” Social Security became more than the intended safety net. For many, it became as important as the air that one breathes. An insufficient quantity causes life to cease. Many of our elders are on the brink of financial death. Even those that did what they were supposed to do were not speared by the black hat of circumstance. The effects of the mortgage debacle have left our elders speechless. Their options have shriveled like a grape on the vine that doesn’t get picked. So let’s cobble together the points that you will need to create your story. (Please note, I will discuss only a few of the salient points that must be discussed with your borrower) I believe that it is also important to repeat these points throughout the story. You cannot expect your borrower to take this all in hearing a point just once.
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