The elephant in the room just sat down. I refer, of course, to Financial Assessment and the sweeping changes that went into effect in our industry on April 27, 2015.
These are positive changes. They create accountability within our industry and help ensure that the right people are being matched with the right loans. In the long term, these changes will benefit us all.
However, there is no denying that in the short term it has created challenges as the industry adapts. A drop in volume is inevitable.
What should the industry do? Raise it with marketing.
Specifically, increase your volume with direct mail marketing. I’ve spoken with many reverse clients who have asked me, “Bryan, how do we find the right balance of people who need our product and those who actually qualify for it?”
This is a great question, and the answer isn’t as complicated as one might think.
Here are four simple tactics to employ in your direct marketing efforts that will help you find that balance:
1 Mail homeowners just turning 62. This is a milestone birthday, just like turning 16 or 18. Now you qualify for all the benefits of a reverse mortgage!
2 Mail homeowners who have not missed a mortgage payment but may have paid their credit cards late. These homeowners may be in need of the money a reverse mortgage can provide, but would also qualify due to their history of on-time mortgage payments.
3 Mail homeowners to educate them on the history and benefits of a reverse mortgage and how it can be a strategic financial tool that can help them age in place. For example, let them know that President Reagan signed the HECM loan into law in 1988 and that you would like to be their trusted advisor to help determine if a reverse mortgage is right for them.
4 Mail homeowners who just went through a major life event. People who experience a major life event, such as the passing of a loved one, are often in need of the financial help a reverse mortgage can provide.
There are two basic elements to a successful direct mail campaign: the offer and the list. The offer is perhaps the easier of the two to establish, as a HECM loan can provide many benefits to the borrower.
The list can be a bit trickier. Again, how do you get a list of homeowners who not only need your product, but will also qualify for it?
Failure to capture this segment is why most self-generated direct mail campaigns fail, especially for the reverse market. You can’t just pull a list of homeowners from county records within a few miles of your office, throw 500 postcards in the mail and expect it to work. First of all, you aren’t reaching the critical mass of volume you need to generate enough calls for the marketing to pencil out. Secondly, you aren’t mailing a targeted list. It’s like tossing a pebble into a crowd and hoping to hit a homeowner with equity, who is 62 or older, who needs a reverse mortgage and can qualify for one.
Employ the services of a direct marketing company that can get you a targeted list with a proven mail piece that can generate enough incoming calls for you to close a few reverse loans. There will be a cost up front, but ask yourself the following question: How much money am I willing to pay per loan in order to fill my pipeline with funded loans every month?
Then escort the elephant out of the room.