Reverse mortgages are somewhat complicated loans designed for older borrowers, and this means that originating them requires a special touch – one that John Luddy has down pat.
As vice president of reverse mortgage lending at Norcom Mortgage in Connecticut, Luddy has been focused solely on HECMs for the last 15 years.
For two years, he has shared his sales tips with readers on HECM World, offering up gems like his industry-renown Old Spice tip, which suggests salespeople stick with an old-school, familiar scent to conjure positive feelings of familiarity with clients.
But digging deeper, Luddy is not just funny, he’s deeply insightful when it comes to effective methods for connecting with older clients, navigating their families’ concerns and properly explaining the loan.
Luddy sat down with ReverseReview to talk about what he believes to be the three greatest roadblocks to closing a reverse mortgage loan, offering his advice on how to overcome each one.
Roadblock No. 1: Adult children
It’s normal for the adult children of a potential borrower to have questions and concerns about the loan, especially considering the fact that there is so much misinformation out there.
Luddy suggested meeting privately with the adult children if they are interested in learning more about the loan so that they feel their concerns are being considered.
He emphasized that originators need to learn how to explain the loan in simple terms, and be able to adjust the conversation to suit people’s varying levels of understanding. Sometimes a client or their child will want to go deep, he said, while others just want the headlines.
“You’ve got to make sure that you’re very careful that you don’t use the vernacular of the industry that a client doesn’t understand, but you also have to understand it well enough that you could explain it to a daughter who has her masters in math and a mom who is slowing down without patronizing either one of them.”
The bottom line, Luddy said, is that you have to really know your stuff.
“You got to have product knowledge – that’s the key when it comes to selling. If you don’t understand the product completely, you can’t make it easy to understand,” he said.
Roadblock No. 2: The cost
The expense associated with a reverse mortgage can be a major barrier to people considering the loan. Luddy suggested originators get past this by focusing first on the client and the problems they are looking to solve.
“You have to talk about their need first – where is the shoe pinching? And then move on to what features in this loan will benefit them, and then you can move on to the cost.”
Luddy said the loan can bring such tremendous relief to stressed-out seniors, that once they are relieved of their money concerns, the costs of the loan is no longer an issue.
“Once they find out that they’re not going to have to worry anymore, the costs aren’t a big deal – they shrink.”
Roadblock No. 3: Procrastination
Luddy said some needs-based borrowers avoid dealing with their finances until their situation becomes untenable, forcing them to consider their options. He calls procrastination once of the biggest roadblocks to closing a loan.
“How do you push them into action? Patience and understanding that you’re not going to change their minds, you’re just going to give them new information, and that will hopefully make them want to move in the right direction,” he said.
Luddy suggested giving clients a moment to digest the facts, saying that he will sometimes take a call or run to his car after he’s given his presentation during a meeting, surreptitiously giving the clients a moment to discuss their thoughts in private.
Luddy said he feels adamant about his obligation to help people who could benefit from the loan understand how life-changing it can be.
“If the program is appropriate for them, I feel a religious fervor to help them jump those fences,” he said. “They might not get there on their own. They are desperately in need of my ability to explain the program in simple terms.”
In the end, Luddy said his No. 1. Sales tip is to the put the client first.
“Be patient. Realize that a lot has gone on in their lives before you entered the scene, and you’ve got to help them figure it out.”