Like many of my colleagues in the reverse business, I worked in an entirely different profession before I moved into the world of HECMs. Ten years ago, I had a successful financial planning practice in Omaha, Nebraska, and like many of my fellow advisors, I did not hold the reverse mortgage industry in high regard.
Prompted by family health concerns, I sold my interest in the firm and moved to Southern California. In 2009, after a few years in Carlsbad, I was ready to purchase a home. At the time, property values there were at an all-time low. I found a single-story home in an upscale neighborhood that was listed at $475,000—40 percent of its previous value. It was just what I had been looking for.
I decided to buy the house and pay cash. But before I made the move, I remembered a flyer I received from my bank about a product called a Reverse Mortgage for Purchase. I decided to call them for more information, and learned that if I put down $185,000, I would have no mortgage payments for as long as I lived in the house, provided that I paid property taxes, homeowners insurance and HOA dues. As a numbers guy, I felt this product was too good to pass up.
The non-recourse aspect of the loan helped solidify my interest. Even if the home’s value didn’t increase in 25 years, the $185,000 down payment was burnt up by accrued interest, and I lived there until they carried me out feet first, I would benefit. I would have lived in a great upscale neighborhood for about $2,100 a month, which includes the down payment spread over 25 years, property taxes, insurance, utilities and HOA fees. Also, the $290,000 I was able to save by not paying for the house upfront in cash could potentially double in 25 years. These facts convinced me to move forward with the loan, and six years later, I’m still here and loving it. When a nearly identical home a block away sold for $979,000, I was elated.
This experience inspired me to pursue a career that unites my financial planning background with reverse mortgage loans. As an originator with a CFP designation, I work hand-in-hand with CFPs, insurance agents and CPAs, helping them explore how a reverse mortgage can fit into their clients’ retirement plan.
Admittedly, being a CFP myself does make it easier to meet and build relationships with other financial professionals. I have joined various groups to support my mission to network with financial professionals, including my local Financial Planning Association chapter and an estate planning group. Much to my surprise, I am the only reverse mortgage person in both groups.
These groups comprise professionals from nearly all financial disciplines—CFPs, CPAs, bankers, trust attorneys and estate planning attorneys. They focus on sharing knowledge through member presentations and case studies, and the information I have gleaned through these meetings has been invaluable.
I can’t emphasize enough the importance of being involved with such groups, especially since reverse mortgages are now positioned to become a significant retirement planning tool. Your fellow professionals need to know how a HECM can help their clients. If you attend meetings, you can be the one to educate them about how it works.
Many of my fellow LOs say that trying to work with CFPs is difficult, and it can be if you are selling rather than educating. But most CFPs believe in and encourage collaboration with individuals from other financial disciplines, realizing that no one can be an expert in all fields. That said, the first thing they assess when deciding whether or not to collaborate with you is, “Are you competent and objective?” If you can show that you are honest and earnest from the start, that will go a long way to developing such partnerships. We all want to do the right thing for our clients, and nothing can replace the team approach when looking for the right solution.
