Written by John Smaldone, as originally published in The Reverse Review.

So the fixed-rate loan has been off the market for more than two months now. How has everyone been doing since the April 1 moratorium?

I would like to take a walk down memory lane for a minute and look at some history behind the fixed-rate product. About seven years ago, the fixed-rate loan was nonexistent; all we had was the monthly or yearly HECM ARM. Fannie Mae had the Home Keeper, its version of the reverse mortgage, which gave us different options to offer but not in the way of a fixed-rate loan. We also had the proprietary reverse mortgage back then for the jumbo loan market. These were reverse mortgages created by institutions like Financial Freedom, who created the “cash account.”

Any lender or broker in the business at that time had the same rate,

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margins and closing costs as the competitor next door. Rates on loans were controlled by HUD, not by the broker or the lender. What kept us competitive with each other was our quality of service. What also separated one from the other was a loan officer’s level of knowledge. Last but not least, the degree of passion and hand-holding displayed by a loan officer also affected his success rate. Back in those days, there was no fixed-rate loan to speak of and we served our customers just the same, discussing the benefits of a reverse mortgage and how it could change a senior’s life.

But then Fannie Mae introduced what we call “live pricing.” This method of pricing in the reverse mortgage industry put us on a level with traditional lending. All of a sudden, rates and fees started to fluctuate. The higher the rate or margin, the more money an LO and his company could make, especially on a fixed-rate loan. The real adjustment to the end of the fixed-rate is not the loss of another product offering for the consumer as much as the loss of this profit.

My friends, our industry may have to revert back to the old way of doing business, and this would be a good thing for our seniors. While the adjustment to business without the Standard fixed-rate product will be hard for some, others may recognize it as a welcome blessing. Just remember this: You need to sell the concept, you do not need to sell the product. It does not matter if it is a fixed-rate loan or an ARM or a Saver. Sell the benefits and the concept of the program, find out what a borrower’s particular need is and fill that need with the product that suits them best! If you stick to that approach, you will succeed.

We are part of an industry that gives us the opportunity to be problem solvers. We help seniors achieve their dreams, improve their quality of life, solve troubling financial concerns, save their homes from possible foreclosure and even bring families back together again. What a wonderful way to spend each and every day.

We have a very bright future ahead us in the reverse mortgage industry. There are more seniors turning of age daily that will qualify for a reverse mortgage than ever before.We should all be thankful to be in this industry!