We are in a new era as far as the reverse mortgage space is concerned. It’s not like it used to be for some of the industry’s old-timers. But the protective measures that FHA has built into the product will go a long way toward making it better for our seniors.

Some say that Financial Assessment has made their work more challenging and that it excludes a number of potential borrows. This may be true, but the fact is that we must embrace the change. I encourage my fellow originators to accept the changes with enthusiasm. They may present new challenges, but they also present new opportunities. We no longer have a product of last resort to sell, but a unique financial planning tool to educate people about.

One of the benefits originators can now discuss is the standby line of credit. The growth rate on a line of credit can do amazing things, especially for seniors in high-value homes with a lot of equity.

Consider the following example:

We have a senior couple that owns a home valued at $480,000 with a $78,000 lien on the property. Let us assume the youngest borrower is 69 years old and the gross principal limit is $260,500.

To stay within the 60 percent first-year ratio, we have a total of $156,000 to work with. Let’s also assume our total closing costs are $16,500. Add to the $78,000 need to pay off the lien for a minimum UPB at closing of $94,500.

We are also going to assume our borrowers do not want to take any cash at closing and put the entire amount in the line of credit, with the exception of the mandatory $100 withdrawl required to activate the credit line. This will give our borrowers $61,400 the first year and the remaining $104,000 available the second year. We now have a total of $165,400 that will be in the line of credit available to our borrowers after the second year, providing they do not take anything from their line of credit the first year.

This strategy is of tremendous benefit to our borrowers. They have paid off their lien and the loan’s closing costs, which means no out-of-pocket expenses, and they now have a substantial line of credit that will grow each month. What a great example to present to a savvy senior or professional partner!

The question now becomes: How do we spread the good word?

Companies are looking for originators who know how to go out there and get business. One great way is to connect with community banks, many of which are looking for ways to increase their customer base. Educate their personnel on reverse mortgages. Offer to hold educational workshops in their branches for the public. Visit doctors, attorneys and accountants in your area. Get to know these professionals and tell them about your work. Tell them about the amazing opportunity afforded by the standby line of credit. Ask permission to display your brochures in their waiting rooms. I found that associating myself with other professionals increased people’s trust in me.

Let’s also not forget that sleeping giant, the HECM for Purchase program. This market is just waiting to be tapped, but for some reason many originators seem hesitant to reach out to Realtors. Remember that Realtors are always looking for new angles that can help them sell homes, and the H4P can be a valuable tool. So start networking. Reach out to brokers in your area and ask to sit down with them to explain the program. Offer to host an educational workshop for members of their team.

If you are willing to do the work, connecting with community banks and reaching out to Realtors, you can achieve great success. An enthusiastic and determined originator, one who views a challenge as an opportunity, has limitless potential.