The HECM is a unique product that requires a unique sales approach. Some might even say the tactics required to close a HECM deal are more akin to those used in the financial services sector than in mortgage banking. To test this theory, I asked sales experts from some of the top-producing reverse mortgage lenders how they take a page from professionals like financial planners, investment advisors and insurance agents to seal the deal.
Partner With a Fiduciary
“The financial services business is all about relationships,” says Joshua Shein, senior director of Home Point Financial, based in Ann Arbor, Michigan. “Likewise, successful reverse mortgage loan officers rely on established referral partners to generate qualified leads. HECM referral partners include the usual suspects, like real estate agents and homebuilders, but reverse mortgages also have unique referral channels—like certified financial planners, wealth managers, senior advisors and retirement planners. Teaming up with a fiduciary who has earned his clients’ trust can be a foot in the door to developing long-term borrower relationships.”
In April, the Department of Labor issued a new rule expanding its definition of “fiduciary” to include financial advisors who provide investment advice and retirement planning services. By law, fiduciaries must offer advice that serves their clients’ best interests and disclose any conflicts of interest. Industry experts speculate that the rule will compel financial advisors to present clients with a wider array of financial products, including HECMs, instead of exclusively steering them toward investment products that generate commission for the advisors.
Get Organized With Tech
“A good financial planner is organized, and so is a good reverse lender,” says Michael Hicks, reverse mortgage divisional manager for Willow Bend Mortgage, based in Plano, Texas. “Having the right technology is key to running your business like a well-oiled machine. Today’s reverse lenders can choose from a wide array of lead generation and contact management tools to help them generate more loans, faster. Systems built specifically for the reverse mortgage industry, like RVSA, even enable loan officers to pull contact data directly into the LOS and begin originating a loan with the click of a button.”
ReverseVision Sales Accelerator (RVSA) is a web-based CRM that shares a database and integrates seamlessly with ReverseVision Exchange (RVX) LOS. ReverseVision offers a free version of RVSA with basic features including email marketing support, contact and activity management, and a “Create Loan Wizard” tool that quickly converts prospects into borrowers. Premium features, available for a fee, include a loan comparison tool and enhanced property, loan and borrower reporting.
Make It a Family Affair
Financial planners often advise older clients to bring their adult children—especially those designated powers of attorney or estate executors—to planning meetings. Similarly, “HECM lenders need to involve the family early,” says Julie Colangelo, reverse mortgage training manager for Essex, based in Orange, California. “It may seem like a time-consuming approach, but in reality it saves time and increases the odds of closing. Spouses need to understand that they have rights whether they’re listed on the loan or not. The kids need to know their parents aren’t being taken advantage of. And the parents want to make sure their decision won’t negatively impact the kids.”
The 2013 Family & Retirement: The Elephant in the Room study by Merrill Lynch and Age Wave found that “being a burden on family” is a top retirement concern among older Americans. HECM lenders should address this concern head-on with the whole family by clearly explaining the rights of non-borrowing spouses and the heirs’ options for settling a HECM loan. Lenders should also point to the extensive body of academic research that indicates using a HECM to extend the life of an investment portfolio helps the borrower retire more comfortably and leaves the heirs with a more generous estate value at end-of-life.
Be a Teacher
The best financial planners don’t just create financial plans; they make them easy for clients to understand. Lenders also play a critical role in client education—and because HECM loans are such a specialty product, lenders usually have to educate the borrower’s financial planner as well.
“The HECM program has evolved, and today’s reverse mortgage is no longer a loan of last resort,” says Sharon Falvey, director of sales operations for Open Mortgage in Austin, Texas. “Rather, it’s a financial tool that enables borrowers to hedge against poor stock market performance by tapping into home equity and protecting other retirement investments. There is a level of sophistication to this approach that requires education of both the borrower and fiduciary.”
Visual aids or calculators that use real client data to demonstrate the positive impact of a HECM on estate value may be the most effective way to explain this “sequence of returns” strategy. And even though borrowers must complete reverse mortgage counseling with a HUD-approved professional, lenders are responsible for ensuring borrowers thoroughly understand their obligations under the terms of a HECM loan.
Create a Sense of Urgency
HECM loans are intimately associated with two topics people hate to talk about: money and death. As retirement and estate planners can attest, people often put off talking about these issues, or they may become defensive or uncooperative.
“To overcome borrower procrastination, I focus on the financial security and peace of mind that come with acting sooner, rather than later, and use models to demonstrate why waiting doesn’t pay,” says David Weinstein, senior loan officer and reverse mortgage division manager for Concord Mortgage Group, based in Westerville, Ohio. “Then I set clear expectations for each step to be accomplished and make those steps as easy as possible for the client to complete.”