I was your worst nightmare. A decade ago, I was that person who told anyone who asked that, in my opinion, they should never get a reverse mortgage. I had built a very large forward mortgage business over the previous decade, based entirely on referrals and educating my clients. But even with my professional financial background, I harbored uneducated and completely unfounded opinions about reverse mortgages.
Thankfully, one of my attorney partners asked for my help in securing a $3 million reverse mortgage for her client. When I was less than positive about her suggestion, she challenged my opinion and I was ashamed to admit that I really had no information whatsoever! I will forever thank that estate attorney. Because she forced me to actually research HECMs, I fell in love with the benefits that a well-done reverse mortgage can provide a client.
I learned that this product made so much sense as a financial and estate planning tool as well as a tool for more needs-based clients. I dug and I researched and I discovered that FHA was offering an amazing opportunity for our senior community. It was so refreshing to have an industry do everything possible to make a loan work as opposed to the ever-tightening forward world, where it sometimes seemed like they really never wanted to make the loans. As I originated HECM loans, and each time I helped a needs-based client, I was both enriched and sobered at the responsibility and the privilege of being a reverse mortgage specialist.
I lost that $3 million reverse mortgage because the client had a fatal accident before we could consummate the transaction, but to this day, 10 years later, her kids contact me annually to check in and thank me for what I tried to do for their mom. Even though she had substantial equity, this senior was struggling to make her mortgage payments and did not have extra money to enjoy her life. She was extremely house poor, and this reverse loan would have provided a huge relief for her as well as $1.5 million in estate tax relief for her heirs. Our industry affords us the opportunity to truly make a difference, so don’t miss those opportunities; I know I never will again!
Each reverse mortgage transaction is different, and each one can provide a solution to a particular problem or fill a specific need. While the needs-based client is always heartwarming, the financial planning and estate planning aspect of this business is incredibly fun—I call it the art of the deal!
When I really became an expert at not only how a reverse mortgage works, but also why it works for countless planning opportunities, I developed a new outlook on how many places we can find business. I once found Purchase clients in tenants! I had one couple recently that had rented for the last 28 years and saved up $200,000 to buy their first home. They actually came to me to see how much of a forward mortgage they could qualify for, and they were very disappointed. She was the only one working, and I could barely get them a $100,000 mortgage. In San Diego, $300,000 won’t buy very much. This was just before we had the principal limit reductions, so with the money they had to put down, they were able to purchase a lovely new $475,000 house. They were thrilled and so was I!
We have all felt the crunch of the recent changes, but I truly believe that for those in this industry who really want to become a “student” of this wonderful product, the opportunities are actually expanding. Real estate agents want to learn about the HECM for Purchase program, and there are more boomers than ever who are concerned about their retirement. They may only have a few hundred thousand saved and they cannot even think about how they might be able to retire before they are six feet under! Our economic woes have created need and we all know that is one of the greatest motivators of all—not the severe need, like we were used to pre-program change, but the real, growing concern in a large majority of the baby boomer generation.
If we view these changes in a “cup is half-full” manner, we will see the opportunities all around us; I know I do and I am excited to see how this next year plays out in our industry. Don’t let yourself fall into the trap of being an old dog who doesn’t think they can learn new tricks—you can, and when you do, you will be grateful that you really embraced the changes and became a wonderful success in our ever-changing but always rewarding industry. Go get ’em!
