The reverse mortgage industry is relatively small, comprising roughly 230 lenders, with a sizable number issuing only one to two loans per month. But at the top of the list sits a handful of lenders hitting much larger numbers—200, 500 or even 1,000-plus loans every month.
The market has inarguably taken a hit in the last few years, but despite the slump, these companies have managed to stand apart from their competitors, achieving notable success in a tough environment. Since February 2014, the same lenders have ranked among the nation’s top five.
So we decided to take a look at the HECM’s top five—their sales strategies, training tactics, marketing agendas and general philosophies—to delve deeper into how and why these lenders have been able to succeed in the face of so much change and adversity.
Sales Strategies
Sure, the HECM is a government-insured financial product designed for a protected class. But it’s still a product, one that needs to be sold. The manner in which lenders approach the sales process is perhaps the most important measure of their success. In speaking with leaders at each of the top five, we found that while their sales strategies differed, their focus was largely the same: educating the client above all else.
When looking at the past year’s top lenders, AAG is a noticeable standout, sometimes reaching a loan volume that is double that of its closest competitor. According to Paul Fiore, AAG’s senior VP of retail lending, the company’s success is a result of its stellar sales force.
“When people wonder how we’ve been able to do this, at the end of the day, it’s about the salespeople. They have to have a buy-in to the philosophy that’s taught,” he says. “When we’ve hired people here and they’ve been successful here, it’s because they truly believe they’re doing good for the senior, and they really want to help.”
Fiore says AAG defies people’s assumptions about what a call center is all about. “The stereotype is: ‘Get somebody on the phone, try to get them to say “yes” as quickly as you can, get out the application and try to close the loan,’ and that’s the farthest thing from what we do. We have a consultative approach to our sale,” he says. “We try to understand what a borrower’s current situation is, how a reverse mortgage may potentially benefit that situation… We try to show them that a reverse mortgage is something that’s going to last them 10, 15, 20 years—it’s not a loan to take today just to refinance six months or 12 months down the road. It’s a loan that should last you for years to come, and that’s really the approach we take. It’s a softer approach, it’s a consultative approach, one that provides a lot of value to the client, which keeps them engaged with us when they could potentially call other people.”
Otto Kumbar, CEO of Liberty Home Equity Solutions, says his sales team also focuses on education. “While most seniors may be aware of reverse mortgages, they have a lot of questions and even misconceptions about the product. Our sales approach targets education first. We provide extensive training to our advisors to ensure that they are equipped to provide the unbiased information that customers need before discussing product options,” he says. “We also believe it is important to have a consistent customer experience at every step of the loan process. We provide scripts, tools and coaching to help advisors consistently deliver a superior customer experience and improve their sales results.”
One Reverse Mortgage President and COO Gregg Smith says his company’s sales model contributes to its ability to successfully cater to clients while staying on top of program change. “We are a national consumer-direct Web center. All of our loan originators are located under the same roof,” he says. “I think that’s what makes us successful—it allows us to refine our process daily, because we run a complex business. So that means that not only do you have changes to the program, but you also have ever-changing compliance, federal and state changes, and you have different messages in terms of marketing… We feel very good about the fact that we’re all working off the same platform and we’re all working with the same training tools. It’s a complex space, and the changes seem to come fast and furious. You need to have the ability to work with those changes on the fly and stay true to the client at all times.”
Training Tactics
Because the current environment is one of constant change, it’s essential that HECM lenders continue to educate and train staff on new regulations, product developments and more effective ways to provide quality customer service. For the top five, efficient and effective training is a key focus.
At Urban Financial of America, President Steve McClellan says the staff’s continued education is crucial. “We have a full-time training department and in addition to that we use an outside service that provides online training. Every Urban associate teammate, including myself, is required to take a certain amount of training every year.”
Fiore says AAG hosts general training sessions twice a week in its centralized call center in Orange, California, in addition to Web and in-person sessions for its satellite locations. “Sometimes we discuss policy change, sometimes it’s sales process, sometimes it’s just industry things that are going on. Every Tuesday and Thursday we do training and it’s very interactive. It’s consistent; the training doesn’t just happen when there are changes coming,” he says. “It’s the foundation of what we do and has been since we started.”
Kumbar also says his company provides ongoing education for its staff. “We have a deep commitment to providing training for our employees and our business partners. Every Liberty employee goes through training that helps them understand our brand, processes and product. We also believe in delivering ongoing training to support personal and professional development of our employees on a monthly basis.”
Marketing Agendas
Another key ingredient to a lender’s success is its marketing strategy. With the passage of the Reverse Mortgage Stabilization Act of 2013, the HECM product evolved as new regulations were designed to make it less of a needs-based product and more of a strategic financial planning tool. This change has required lenders to connect with a different kind of audience in order to sell the product. The top five have each taken their own approach in an attempt to reach a new consumer base.
Fiore says AAG has been testing new messaging in various mediums in target markets. “We take risks within certain markets to see how the response rates would be,” he says. “For example, we created a campaign that’s designed to speak to the caregiver market and explain to them how a reverse mortgage will benefit not only the senior, but also the caregiver. We’ve tested that successfully in certain markets. We’ve tried a couple of different things on the Web, which speaks to different types of reasons why people would take a reverse mortgage.”
But the messaging of the company’s national television campaigns hasn’t strayed too far from its core. “That’s really a driver for us and the biggest kind of media we do,” says Fiore. “We’ve been staying true to our message, but with certain variations that allow us to test [different markets].”
Kumbar says Liberty has also been testing new strategies. “We believe that connecting with baby boomers is critical to the future growth of our industry, so over the last year we have been expanding our messaging and [generating] creative ideas to reach this segment,” he says. “We’ve also launched several products that have lower origination fees in an effort to target customers shopping for traditional home equity loans or refinancing. For these customers, we focus on the flexibility and security that a reverse mortgage provides compared with traditional loans. So far, our results have been very positive and we’ve been able to grow in the segment.”
Sharon Robbins, SVP and chief marketing officer at Reverse Mortgage Solutions/Security One Lending, says it will take time for the industry to reposition the product as a financial tool. “Historically, the product was delivered to a needs-based customer, but now we spend a lot of time talking about using the product as a financial tool for retirement planning as well,” she says. “Unfortunately, that concept hasn’t gained a lot of traction, but we think it will start gaining traction one loan at a time, by having credible players in the industry.”
Robbins says RMS/S1L is working to develop multiple channels in order to expand its customer base. “We are looking at a variety of new ways to originate different borrowers. We have a variety of channels, including programs for financial advisors, Realtors, builders and programs for a strong network of business partners. We have HECM for Purchase programs,” she says. “We also have a task force looking at opportunities to develop new proprietary products. We think that is the opportunity that is laid out in front of us. How we harvest that opportunity is going to take some fairly sophisticated programs and marketing, and a differentiated value proposition.”
Smith acknowledges that increasing the product’s historically low penetration rate is a problem that has plagued the industry for years, and one that will take a great deal of innovation to solve. “That’s a challenge that we’ve had for many years: expanding the audience. We focus on that every day.”
Corporate Ethos
Each lender in the top five has its own particular philosophy that serves as the driving force behind its sales efforts. For RMS/S1L, Robbins says this ethos is multifaceted. “[It is] based upon our commitment to our customers, our employees and our shareholders, as well as a focus on our core values that are built around integrity, performance, being customer-centric, challenging the status quo, educating our borrowers and being accountable.”
Fiore says AAG’s philosophy centers on building a relationship with its clients. “We try to truly understand what their situation looks like, visualize how these people live and, more importantly, visualize how they’d like to live. So that’s not really a numbers conversation, that’s a quality-of-life conversation. That’s a quality-of-retirement conversation. Our philosophy is to go deeper, and to involve every single person you can who is a part of the decision-making process, so there are no surprises along with way.”
At ORM, the focus is also on the client, with customer service a top priority. “For us, it’s about our culture, it’s about our team and it’s about our process—that’s the real difference maker. So, culturally, who are you as a company? We are exclusively, 100 percent focused on the client, and everything we do every day is about how we can improve the process for our client,” Smith says, adding that it’s also about motivating your team. “Do you have the team, do you have the necessary folks? Do you have your leaders? Do you have an environment where those leaders and your team members feel empowered to continue to grow and be part of the client focus? We take that seriously every single day.”
As for Urban, McClellan says employee integrity is key. “We have two rules in our company that we apply in every situation: Do the right thing, and if you forget what to do, remember the first rule,” he says. “We evaluate our employees on client focus, integrity, teamwork, innovation, respect for each individual and responsible citizenship. And we believe that if we do that, we can be successful in the marketplace, whether it’s in our retail, our wholesale or our correspondent channels. That’s what epitomizes the Urban approach.”
The Big Paves the Way for the Small
These lenders are leading the charge. Smaller players could not only learn from their successes, but also stand to benefit from them. Their efforts to spread a positive, consistent, nationwide message about the product could help others working in the space by alleviating the misperceptions that have hindered sales.
So what can smaller players in the business learn from the HECM’s top five?
According to Smith, market participants should learn to roll with the punches. “Anyone who has been in this environment for the last five minutes or 10 years has to be prepared to evolve and change their business, because we seem to have one to three changes per year that we have to deal with. If your business isn’t able to evolve, then you’re going to have a hard time being successful in this space.”
Fiore says participants need to remain positive in the wake of program changes that may exclude some potential borrowers from accessing the loan. “For those in the industry who are worried about Financial Assessment, my advice would be to hang in, because there are so many other seniors who could benefit from this great product,” he says. “I think there’s still a tremendous amount of upside for everyone in the industry.”
For Kumbar, success for lenders big and small relies on industry-wide collaboration. As head of the Extreme Summit campaign, a national P.R. effort designed to revamp the product’s image, Kumbar stresses the importance of getting involved in the conversation about how we can work together to advance the HECM.
“In order for our industry to grow to its full potential, we believe that it is critical for lenders to work collaboratively to improve the product perception and to build awareness for reverse mortgages beyond the needs-based customer segment. Everyone in the industry should be thinking about how to double or triple our education efforts,” he says. “We can all work together through NRMLA to support broader public awareness and the acceptance of reverse mortgages.”
