How Reverse Mortgages Can Help Millions More Americans

As the reverse mortgage industry continues to try and find new ways to expand business in the wake of difficult challenges that come with regulatory changes and generally reduced volume, one reverse mortgage loan officer was looking for an opportunity to share a novel idea in terms of a new marketing target for originations: people who primarily work on commission-based income, and by extension the millions of Americans who are self-employed.

“This strategy actually came to me via a real estate agent four years ago, and she was the one that [first] came up with the idea,” says Donald Sutherland, a reverse mortgage loan officer with HomeBridge Financial Services out of Durham, N.H.

This real estate agent detailed for Sutherland that the options found in the reverse mortgage line of credit would take a significant amount of stressful financial pressure off of her in making a traditional monthly mortgage payment. By replacing their forward mortgage with a reverse product, they can instead choose to pay down their new loan whenever they receive a commission check as opposed to being forced to find a way to make their monthly traditional forward mortgage payment even in a time of limited sales activity.

Sutherland recognized that this could be a high-potential marketing direction, while also helping to solve a problem for a particular segment of potential customers.

“I thought it was really important to get this message out right now is because I think we’re missing a big segment of the potential reverse mortgage client: people who do nothing more than I do, which is commission-based,” Sutherland told RMD. “If they have a traditional mortgage, the problem they have is that every month they need to make a sale, and it just adds a tremendous amount of pressure to have a sale every single month [so you can] make your mortgage payment.”

Getting the word out

When Sutherland went to his employer at the time the idea was first presented to him, the marketing department there elected not to develop any materials based on the idea of aiming the reverse mortgage specifically at commission-based workers.

“They would not produce this marketing piece for me,” he explained.

A new opportunity arose, though, when Sutherland recently joined a new company.

“I just came to HomeBridge about two-and-a-half months ago, and the marketing department there [quickly] engaged with me,” he said.

HomeBridge worked with Sutherland to create an official marketing postcard that was then converted into a digital format for online sharing via email and social media, and when he shared the new marketing materials on LinkedIn, it garnered immediate interest from his network of connections in the reverse mortgage industry.

“For the little publicity I could give to it, it [largely] had to be word of mouth, but I was looking for a bigger forum, i.e. LinkedIn. I have over 6,700 connections on my first level, and I obviously really wanted to reach a broader audience, but I couldn’t do it without having something sanctioned,” he said.

Broadening the approach

The response, Sutherland noted, was immediate. It garnered more post views than he’d ever seen compared with anything else he shared with his connections on the network, received positive engagement in the form of comments from others in the reverse mortgage community, and even led him to expand the way that he thinks of this kind of product application through a conversation started by the initial posting he made on the business social media platform.

“I actually got a phone call from someone who’s a reverse mortgage educator for our competitor […] and he inspired me to broaden the scope of this,” Sutherland said. “My scope was commission salespeople who sell cars, insurance, mortgages, and real estate. He said we should broaden this out to people who are self-employed, because many self-employed people are home-centric, they’re successful, but they don’t have 401K’s or IRA’s, or pension plans.”

This educator told Sutherland to imagine a plumber in their mid-60’s who loves the work, but doesn’t want to carry a full load of projects every week. They still, however, carry a forward mortgage payment.

“Now, this person could come back to maybe doing two projects a week, and not have to worry about potentially not [being able to] make a mortgage payment, but making it when he gets the project,” Sutherland said of the educator’s idea. “I hadn’t thought about that aspect of it also, so this has actually opened my eyes because other people have contacted me.”

Enjoying sales again

The demographics of the initial focus on Realtors also support this potential client profile as a marketing opportunity. According to the 2018 member profile released by the National Association of Realtors, 43 percent of male Realtors were at least age 60, while 57 percent of female Realtors were also age 60 or older.

For the original Realtor who gave Sutherland this idea, the peace of mind was well worth any additional costs she would have to incur.

“I said to that Realtor that her interest rates are going to go up from 5 percent to 6.25, and she said she was okay with that because it was [still] relieving something that’s really burdensome to her, namely the stress [of a forward mortgage payment],” Sutherland explained. “Secondly, she said to me that even if [interest] goes up 1.25 percent, she still gets it back on her [tax form] 1098. And lastly, on the closing costs, she just rolled that in to having more peace of mind, and she believes it’s worth it.”

If anything drove home this idea’s potential for effectiveness, though, it was something that the Realtor told Sutherland specifically about the new peace of mind granted to her by removing the sales pressure that accompanied her forward mortgage payment.

“She told me, ‘I can enjoy selling real estate again.’ And that can probably be applied to anyone in commission sales,” Sutherland said. “They can enjoy selling cars again, enjoy selling insurance, because they won’t have that pressure on them every single month.”

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