Originators will agree that marketing reverse mortgages is a challenge. Statistics tell us that the product, for which 13 percent of the population qualifies, has only about 2 percent market penetration. That’s millions of dollars worth of equity just waiting to be mortgaged.
Ever since the first baby boomers turned 62 in 2008, we have heard the figures on how many Americans were reaching retirement age: 10,000 per day, by most counts. So why is this product so hard to sell when it is so beneficial? It comes down to education rather than conventional selling. And the people we need to educate aren’t just the qualified borrowers; it is their children and other trusted advisors.
Negative connotations linger from the early days of equity sharing. Before the FHA took on HECMs in the late ’80s, the bank really did own your house. Facts continue to be misrepresented in the news every day. Numerous accountants and financial planners tell their clients to stay far, far away from a reverse mortgage; this despite FINRA no longer describing reverse mortgages as a “loan of last resort.”
My very first employer in the reverse mortgage industry was passionate about the benefits these loans could bring to those who needed them the most. He had been in the real estate business for decades and had just opened a mortgage brokerage in an adjacent office building when a good friend’s mother died in a nursing home. The friend was convinced that the move from familiar surroundings into institutional care had hastened her death. If she had just had a little money to enable her to stay, she would have lived a longer, fuller life in her own home.
At around the same time, my boss read an article in the Wall Street Journal about reverse mortgages, a little-known and poorly understood concept that was just beginning to gain popularity. Though too late to help his friend’s mother, he realized the need and the potential benefits for senior homeowners. He flew to Atlanta to meet with the staff at Financial
Freedom, then the No. 1 lender, to learn more.
Nearly 10 years ago I was recruited to join his mortgage firm along with a handful of other loan originators. Some were drawn from the mortgage world and some (like me), were from various professions that he foresaw would succeed. An experienced businessman, he of course saw the earning potential, but it was his belief in the benefits of the product that convinced me to join the team.
I learned everything I could. Marketing was expensive and frustratingly ineffective. It was the standard fare: lunch seminars for seniors, newspaper ads, purchase of pre-qualified leads, postcards, radio ads, senior expos. These work to a certain extent, but it wasn’t until my second or third year in the business that I discovered what I’ll call an “indirect” or “warm” referral.
Our firm ran ads on a local AM radio station’s oldies show. The host of the show invited me to be interviewed on-air. I would prepare a list of reverse mortgage questions that I’d be asked and would answer, and the host, Jack Ellsworth, would tell listeners, “Just call Pat; she’ll tell you everything you need to know.”
And call they did. This type of marketing establishes a company or individual LO as the expert. Personal referrals from previous clients are uncommon. Reverse mortgage borrowers tend not to tell their friends that they even have the loan. A conventional mortgage is a fact of life, while there is still a stigma attached to a reverse loan, thought of as a loan of last resort for the impoverished, taken by a member of a debt-phobic generation. An “indirect” reverse mortgage referral is more likely to come from a person (likely an attorney or CPA) considered to be an expert in his field and given to an expert in another.
The most effective referral is what I’ll call a “direct” or “hot” referral, where the source brings his client or friend to you directly with the instructions to “do a reverse mortgage with Pat.” You have already proved yourself to be proficient and fair with other clients and you are expected to do the same again. The key, I have found, is twofold, requiring you to know your product and always do the right thing. Give each client the best information and ultimately the best deal possible.
Instead of the usual mortgage marketing, or in addition to it, spend more time and energy on educating yourself on all the technical aspects, as well as the benefits and pitfalls. Educate other professionals in the same way. I was a teacher before I became an LO, and that experience is invaluable. Like any good teacher, I keep my curriculum current and tailor it to the level of my class. Attend conferences, seminars and every webinar offered. Join groups that share information. This can be networking with a chamber of commerce—joining is not enough. Be active within the chamber and your local community, and the respect you earn there will carry over to your professional world. Become The Trusted Expert. Many LOs are making good progress in educating financial planners as the use of reverse mortgage funds shifts.
Sales and marketing techniques are quite different from those in use in the forward mortgage world. The nature of the reverse mortgage client is totally different and therefore they must be handled differently. Reverse mortgage candidates are, on the whole, a cautious, even suspicious, group. Earning their trust is one part instinct and two parts patience, and it is critical for success. While senior borrowers may be uninformed or misinformed about some financial matters, they are not gullible and are not easily fooled or bullied. Aggressive marketing and impatience are met with added caution. They are looking for a professional they can trust, but can be equally suspicious of an overly friendly loan originator who tries too hard.
Reverse mortgage clients want to be confident they can trust you—one unintentional error could spoil your chances of earning that trust. Be genuine and reasonable in lead follow-up. Marketing in the reverse world is more about developing trust than selling a product. If you are perceived to be less than honest or too aggressive, you may lose an opportunity to help someone access this potentially life-changing loan.
