Origins: A Father-Daughter Team Shaping the Reverse Mortgage Landscape

There’s an old adage that says that “two heads are better than one,” and when it comes to the promotion and origination of reverse mortgages, having a team work together toward a common goal can often be a difference-making advantage. One of those teams is a little more unique than others that you may find, though, since this one is made up of a father and a daughter.

Scott and Christina Harmes of C2 Reverse
Scott and Christina Harmes, the “Harmes Father-Daughter Team” from C2 Reverse.

In the latest edition of RMD’s “Origins” series, Scott and Christina Harmes – national manager and assistant national manager, respectively, of the C2 Reverse Division at C2 Financial Corp in San Diego, Calif. – chart their respective and unified courses toward working together in the same field, and what difference it makes when you have both a team, and a family, working in common cause.

How long have the two of you been originating?

Scott Harmes: I’ve been in the mortgage business since 1982, so over 37 years.

Christina Harmes: Since 2011, so 8 years.

How did you first learn about the reverse mortgage product, and what led to your initial realization that reverse origination was something you could do together?

Scott Harmes: 10 years ago, I got a call from a client that I had originated traditional mortgages for and he asked me if I could do a reverse mortgage for his parents. As a seasoned broker with deep mortgage knowledge, I had great confidence when I told him that I could.

What followed was an experience that changed my career; I cobbled together a reverse origination process “on the fly” which made it difficult, though I was successful, in maintaining borrower confidence and closing the right reverse for the client in a timely fashion. The borrowers were very happy because they could now age in place, though I found my first reverse to be a process fraught with anxiety.

The reward from working with that reverse borrower was in such contrast to the difficulty in making my first reverse a success, that it gave me the inspiration to commit to becoming a reverse mortgage expert. The result of that commitment is my achievement of the Certified Reverse Mortgage Professional (CRMP) designation and the result of that ‘tough first reverse’ is the inspiration behind our creation of the C2 Reverse Training, Certification and Origination Program. I don’t want to see any of our C2 Loan Officers go through the type of experience I had on my first reverse!

Christina Harmes: I joined my dad in originating both traditional and reverse mortgages and on the closing of my first reverse loan, the wife gave me a big hug with tears of joy in her eyes. From there, I was hooked; I am now also a CRMP and reverse mortgages are my passion!

What would you say was the earliest big test you found most challenging in your careers originators? Were those big challenges on an individual basis, or as a team?

The founder of the C2 Reverse Division, Monte Howard, died suddenly in 2016. So, as top producers for the C2 Reverse Division, we had informally become Monte’s “right & left hands.”  C2 Management tapped us, as a team, to step in to Monte’s role in leading the C2 Reverse Division.

This was a tough period as we grieved for Monte, our friend and mentor, while needing to keep “the boat running smoothly in the water” through the day-to-day servicing of our loan officers, their clients and, as producing managers, our clients. We were determined to honor Monte’s legacy and build on the momentum that he had created at C2 Reverse.

What is the most unusual case that you’ve had to deal with together in your capacity as a team, and how did you solve it?

We had a borrower with a “Land Sale Contact”; this is a sale where the buyer gets “equitable title” but the actual title is not recorded in the buyer’s name. In this case, the buyer had been making her payments monthly to the seller for over 20 years, then the seller would make the mortgage payments for the mortgage that was still in his name. [Scott] had been approached about refi’s on Land Sale Contracts over the years and had never seen one close with title vesting upon closing in the original Land Sale Contact buyer’s name, until this case.

One of our Wholesale Account Executives, who is also a CRMP, gave us very specific direction on how to navigate this refi through to closing… with title vesting upon closing in the original Land Sale Contact buyer’s name! Unfortunately some time after that closing, the borrower passed away; but fortunately her home, with more than $400,000 in equity, was now in her name, included in her trust and her daughter got the benefit of that equity.

So the reverse mortgages improved the borrower’s cash flow while aging in place and created protection for the equity in her estate. Thank heaven for expert Wholesale Account Execs!

What would you classify as the biggest accomplishment as a team operating in the reverse mortgage space?

  1. We are both proud to have achieved the designation of Certified Reverse Mortgage Professional.
  2. We think our biggest accomplishment, which is an ongoing mission, is the creation of the C2 Reverse Training, Certification and Origination Program, including our Online Loan Officer Toolbox the Blue Door Portal and our weekly Blue Door Webinars. At C2 Reverse we use the Blue Door as the professional entry point for C2 Reverse Certified loan Officers; behind the Blue Door our loan officers get the tools, training and techniques to market to, originate for and effectively serve our protected class of senior borrowers.

What do you two think is needed for potential borrowers to be more fully educated about home equity release?

A better educated media/press and better trained financial professionals that are trusted advisers for senior homeowners. There is a legacy of misinformation that is the greatest obstacle to more senior homeowners appreciating and acting on this flexible financial tool for improving cash flow and financial security.

With program changes in recent years, the portion of press coverage that is positive has far outgrown the misinformed negativity. Additionally, the work that NRMLA does as a proactive steward of the reverse program is having an impact assuring that their membership markets, originates and serves senior homeowners professionally and ethically.

Where do you see the reverse mortgage industry in 5-10 years?

There are two major influences on the reverse industry that we feel are causing changes right before our eyes:

  1. The transition of the primary reverse demographic to being the Baby Boomer Generation. The Baby Boomers are less reticent about carrying debt into retirement than the Greatest & Silent Generations. And while Baby Boomers are carrying far more housing wealth into retirement than these prior generations, they are carrying proportionally less financial wealth and security into retirement due to the impact of the great recession, the near extinction of private sector pension plans and the modern strains of helping adult children and grandchildren. We believe we will see dramatically greater market penetration for the reverse industry with the Baby Boomer generation!
  2. The evolution of the reverse program away from the needs-based borrower to prevalent use by the strategy-based borrower; this being the result of tightening restrictions for the FHA HECM and the near concurrent blossoming of an entire crop of flexible proprietary and jumbo reverse programs. The current FHA HECM is not serving nearly as many homeowners of lower priced homes which is a negative for the reverse market in states with lower median home values. The growing number of proprietary and jumbo reverse programs, which are being enhanced on an ongoing basis, are opening up entirely new markets for use of these flexible financial tools for homes in states with high median home prices.

What is the industry’s biggest challenge today, and how can it be overcome?

The biggest challenge is ‘institutional education’ of the media/press and professional financial associations that, perhaps inadvertently, work to the detriment of senior homeowners by inappropriately perpetuating a reverse mortgage stigma. This challenge is being addressed every day by NRMLA and its members, who are the best trained reverse professionals and who are committed to the NRMLA Code of Ethics and Professional Responsibility.

Complete the sentence: If we could change one thing about the reverse mortgage it would be __________

Evolution to a market perception of a reverse mortgage to the same level of general acceptance as the traditional ‘cash-out refi.’ We are mystified why a cash-out refi has great general acceptance while the reverse program, a cash-out refi with no required monthly payment, is so commonly resisted.

If we could erase one reverse mortgage misconception it would be: __________

That with a reverse mortgage you lose all your equity. This misconception has made the Reverse Amortization Schedule our ‘go to’ demonstration tool which we train all our C2 Reverse Certified Loan Officers to use. We demonstrate that for the actual structure of most reverses, even using FHA’s mandated 4 percent appreciation rate and with the borrower not making payments, the borrower sees their equity continue to grow for the first 13 to 17 years and often longer.

This is longer than the average time period before most reverses are paid off which means that for most reverse borrowers, their reverse allows them to cover  the monthly carrying cost of their mortgage with a portion of their ongoing appreciation. So in retirement, when cash flow is typically the biggest challenge, a reverse can make appreciation liquid.

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