An independent broker originator specializing in reverse mortgages is generally the only face the customer sees from the lender segment of the industry. But everyone involved in the origination of reverse mortgages impacts the customer’s experience.
As experienced, knowledgeable and conscientious broker originators, we try to understand what it’s like for the lender’s staff in all departments. In return, the lender’s staff needs to understand the customer experience from our view in order to work toward providing the best customer experience possible. To help others involved in the process, I’ve compiled information detailing the broker’s perspective, including some challenges we frequently face as we work to bring a loan to close.
Taking an Application
This is a time-consuming process. During the initial consultation conversation with a prospect, we discuss their situation and whether they will even qualify, i.e., factors needed to meet FA, their goals and needs. Once it is determined that there isn’t a blatant red flag, we meet with them for an informational meeting face to face, which takes an hour or two (plus the commute). Another face-to-face meeting happens at application to explain what they are signing.
During these discussions, we outline the details of the reverse mortgage, providing the facts, terms and benefits as well as risks. We often have to overcome the “reverse mortgages are bad” myths and assure them that this is a legitimate product offered by professionals. Some decide quickly while others can take years to make a decision to proceed. At that point they are generally anxious to get to closing.
Gathering and entering all of the necessary application information in the lender’s system software and then printing and organizing a complete and compliant application package consumes significant time.
We often find ourselves apologizing for borrowers having to sign so many application documents, many of which are duplicates. Consolidating the disclosures would make it feel less overwhelming mentally as well as physically. The applicants are usually at their highest level of customer satisfaction during the application interview, but this starts to decline when they begin to slog through the massive number of documents that must be signed in the application package. It can frighten them into thinking that they are making a mistake.
The issues below can be very frustrating to borrowers and can make originators and lenders look incompetent, building mistrust and negativity about reverse mortgages.
When we submit a file to underwriting, we review the information and try to be sure to include everything on the checklist. We give the applicants our best estimate as to how much longer the process will take based on information from the lenders.
Setting realistic expectations with borrowers is huge. We’re often told underwriting will take between 24 and 48 hours, but this doesn’t include the day it may take to get to underwriting. We find that many junior underwriters don’t understand the program sufficiently and ask for things that aren’t necessary, further delaying the file from getting to a senior underwriter.
It’s important to be realistic and accurate so we can schedule the closing date. The schedules of the closers and the notaries can fill up weeks in advance—as can borrowers’ and our own.
We do our best to gather all needed documentation before sending a file to underwriting. Sometimes, brokers encounter frustrating situations that can downgrade the customer’s experience.
-The lender’s staff overlooks documents, claiming they are missing files that were already submitted.
-Appraisers feel the underwriter is questioning their work in cases with appraisal conditions, and this may lead to frustration that can delay their submission of changes.
-A failure to spell out conditions specifying what the underwriter is looking for leaves us questioning what was missed or the requested paperwork is needed.
-Underwriters continue to ask for documentation when what was provided is all that is available and provides a clear paper trail.
-The lender’s staff requests documentation because they say it’s a HUD requirement, but this is untrue because other lenders approve.
-We gather and submit conditions quickly, but the lender has not completed the conditions they need to complete, delaying the clear to close.
-Some final conditions are easily verified but may take a couple of days to obtain. In the essence of time, why can’t these be funding conditions rather than conditions that must be addressed prior to close?
-The document is not what was expected (e.g., they expected a wire but received a check).
-Additional conditions are requested from closing or funding that have already been submitted and approved by underwriting. Besides the frustration, it is time-consuming to have to locate and resubmit the documents. Why don’t these departments have the underwriting file on hand with all the documents that have been submitted and approved?
-As brokers, we generally attend closings, even though they are sometimes a two- to three-hour drive away. The documents are needed in time for the title company to finalize the documents, print and sometimes drive to the borrower’s home. When there are delays, it’s embarrassing to the industry as well as inconsiderate and disrespectful to all involved in the transaction.
-Inform brokers of new disclosures and document requests so that we are able to explain them to the borrowers rather than blindly asking them to sign.
-Approval of Title, AMCs, etc. – Check for title and AMC approval when a file is first submitted so the appropriate forms can be completed while in underwriting.
-Explain why certain documentation is needed. If brokers know and understand why underwriters are asking for things, it is easier to communicate with borrowers and explain HUD’s requirements early on.
-To expedite funding in a HECM for Purchase transaction, review only five to six key documents. Some lenders are already doing this successfully.
-Recognize that all borrowers do not have easy access to email, transportation, UPS/FedEx, or a notary. Some live in rural areas, making it difficult for us to obtain documentation easily. Look for alternative or creative solutions.
Despite our efforts to run interference for our borrowers and make the process as simple and fast as possible, many are left with a very negative view of the experience after the loan’s close. This negativity spreads quickly and feed’s the public’s mistrust of reverse mortgages.
When the process is dragged out, some borrowers get angered or offended and back out, while some get exasperated or discouraged and switch to “Option B” (sell the home or get a HELOC even though it isn’t the best solution). Sometimes those who qualified under FA run out of funds and have delinquencies that force them into a LESA.
As brokers, we are the lender’s customer, and our goal is to make things better for the borrower. We choose our wholesale lenders according to who provides quality customer service, making our job easier and getting us to funding in the most professional manner. It’s imperative the brokers and lenders try to understand each other’s perspectives as we work together to help a borrower close a loan. For the sake of the industry, providing the best customer experience possible must become a top objective for all who work in the reverse mortgage field.