With about half of all U.S. homeowners entering their 60s or 70s, one of the options is sure to be the Home Equity Conversion Mortgage (HECM), the reverse mortgage program from the Federal Housing Administration (FHA). HECMs enable homeowners to draw on a portion of their home equity and use it for maintenance, repairs or general living expenses.

“HECMs already account for 90% of all reverse mortgages. But with the FHA guarantee comes a number of conditions and requirements.”

Although reverse mortgages have been marketed heavily in past cycles, the popularity of the HECM comes from the fact that it’s fairly flexible and, more importantly, insured by the FHA. Just as some would consider the FHA purchase mortgage the “workhorse” of the Great Recession period, the HECM could well become a workhorse loan in a competitive market for an aging population of homeowners.

In fact, HECMs already account for 90% of all reverse mortgages. But with the FHA guarantee comes a number of conditions and requirements. Mortgage lenders succeed, in no small part, by staying compliant and understanding the requirements and risks of the loans they make.

As origination volume increases, product offerings expand and the temptation to quickly ramp up sales of different mortgage types grows, lenders and the originators who work with them should be clear in their understanding of the FHA’s specific requirements for a HECM. This goes beyond the rules governing the origination process and includes a number of requirements in the closing and settlement phases of the transaction that differ from those of other reverse or purchase mortgages.

Clear requirements

The U.S. Department of Housing and Urban Development (HUD) has set forth a number of clear requirements on the origination side of a HECM. The borrower must be at least 62 years old. They must live in the home that is backing the mortgage, stay current on taxes and insurance, and maintain the property.

There are other elements to a HECM, however, that may not be so clear. Taking out this type of loan, for example, can sometimes negatively affect the borrower’s ability to qualify for Medicaid or Supplemental Security Income. And just as with a conventional purchase mortgage, a HECM borrower must pay off the loan should they choose to sell the home.

Additionally, criminals have been known to target reverse mortgage borrowers and lenders with an ever-evolving array of scams and fraud attempts. Lenders and closing companies need to be on the lookout for new schemes and they should proactively educate their HECM borrowers.

Most lenders that choose to offer HECM products are aware of these requirements and risks. But not every HECM provider is clear on the HUD requirement of preclosing counseling for the borrower.

This is mandated to ensure the borrower is clear about the responsibilities and risks that could apply to their HECM loan. The loan will not be approved without proof of counseling.

Additionally, the counseling may only be performed by HUD-certified counselors. Mortgage lenders seeking to produce greater HECM volume would be wise to work with third-party service providers (such as closing companies or notaries) that are familiar with HUD’s requirements. Service providers should also have ample experience and might even employ specially designated HECM experts. If these companies don’t directly employ trained HECM counselors, they should have close-knit partnerships with these professionals.

Extensive scrutiny

In addition to HUD’s requirements for HECM lenders and borrowers, there are practical ramifications when lenders fail to thoroughly vet their potential partners — especially if they intend to lean on the expertise of these partners. Notaries, for example, can play a key role in the HECM closing.

Simple errors are frequently seen from notaries who are not trained or experienced with the requirements and details of closing a reverse mortgage. These mistakes often include an inadequately signed HUD addendum; a failure to procure the HECM counseling certificate; or failing to obtain documents that are not collected at closing, such as a death certificate if one of the homeowners on the title has died.

The vetting and selection process for choosing a HECM partner is important for the mortgage lender seeking to enter this market. Robust and updated procedures should be put in place and monitored. The partner should be in lockstep with the lender, especially on matters of closing procedures and fraud prevention.

Continuous training and consistently documented oversight are also advisable — especially considering that reverse mortgages tend to receive extensive scrutiny from compliance agencies due to the potential for fraud and the vulnerability of the typical HECM borrower. The HECM is not a typical mortgage, so lenders, originators and service providers should be extremely transparent and proactive with education and explanations.

Because of the increased potential for error or omission, HECM-trained notaries are usually held to a higher standard than the notaries who perform conventional purchase closings. From a lender perspective, having an experienced HECM partner can also mean a smoother borrower experience. HECM-trained closing experts can usually better explain the nuances of the closing and are prepared to take the small, extra steps that can accompany this type of transaction.

● ● ●

Expect to hear a lot more about HECMs in the coming months and years. Executed properly, this loan program could prove to be a significant revenue stream at a time when lenders are battling for market share. For lenders willing to go the extra mile to ensure a smooth experience for the borrower, HECMs may, in fact, prove to be a true competitive advantage. ●

The post Aging America Will Choose This Option appeared first on Scotsman Guide.

In Episode 009 of the Scotsman Guide Author Showcase, Carl White interviews Chris Moschner of AAG about his article, “Brighten Their Future,” in the July 2023 issue of Scotsman Guide Residential Edition.

Chris Moschner is chief marketing officer at AAG, a division of Finance of America Companies. Moschner joined AAG last year and has spent his 19-year career delivering winning marketing strategies. By leveraging his technical background, he has focused on simplifying complex product concepts to better demonstrate customer value and drive sales growth. He previously worked for insurance and annuity companies Protective Life and Brighthouse Financial. Before that, Moschner worked as a brand manager for Procter & Gamble. 

The post Author Showcase: Chris Moschner, AAG appeared first on Scotsman Guide.

In a refinance-heavy market, all the homeowner has to do is tell a friend they locked in a better deal on their existing mortgage and it’s fairly easy for the originator’s phone to start ringing. Winning the trust of a new refi borrower is not a high hurdle to clear.

“Smart loan originators are finding that referrals from family members carry a lot of weight. They can build a level of trust that’s otherwise nearly impossible to achieve.”

The purchase money business is different. Homebuyers know that no two deals are alike. They want to know that the lender they choose can help them navigate unfamiliar waters and arrive safely at the closing table. First-time homebuyers, in particular, have a high degree of anxiety throughout the purchase process.

These prospective clients aren’t going to call someone just because an acquaintance says you’re a good person and you once helped a friend with a refi. Unless, of course, the person telling you this loves you as much as your mother — or better yet, is your mother.

Smart loan originators are finding that referrals from family members carry a lot of weight. They can build a level of trust that’s otherwise nearly impossible to achieve. Getting these referrals will have a huge impact on an originator’s business.

If only there was a loan product that could, originated with the expertise that delivers an excellent borrower experience, make earning referrals easy. As luck would have it, there is. The secret is the reverse mortgage.

Effective marketing

Referrals from previous clients are invaluable in a purchase-centric market. First off, it’s the most cost-effective business the originator is going to get. It doesn’t depend upon new marketing and advertising expenditures. Unlike traditional advertising, this word-of-mouth marketing allows satisfied clients to do the work of targeting new applicants.

As you might expect, this results in higher conversion rates — or at least higher lead-conversion rates. Today’s borrowers have been trained to make a loan application with a number of lenders and then go with the one that suits them best.

“Reverse mortgages are a mature product set with easy-to-understand compliance rules that any lender can learn and apply to their institution.”

Experience matters now more than ever. But referrals pay dividends, too, after the deal is done. A referral builds a trust ladder two stories tall, which makes it more likely that both parties will refer to the lender again. When it’s a family member who is referred, they come into the transaction in the glow of their relative’s good experience. This makes it easier to provide them with a similar experience because they are already conditioned to receive it.

Best of all, a well-oiled system for getting referral business will improve the originator’s reputation in the community. As more clients recommend the originator to others, the originator’s reputation as a trustworthy and reliable source of financing will naturally increase. So, how does the originator make this happen?

Growing opportunity

Reverse mortgages are a fast-growing business for a number of reasons. The first reason is all about demographics. There are more people who are eligible for reverse mortgages now than ever before.

Census data suggests there will be more than 80 million Americans who are 65 or older by 2040. About 10,000 people each day are reaching the age of 62. That’s the minimum age for reverse mortgage borrowers through the Federal Housing Administration’s Home Equity Conversion Mortgage program. (Borrowers 55 and older can choose a proprietary reverse mortgage.)

Furthermore, modern medicine and better lifestyles among older homeowners means that these folks are living longer than ever. This is positive news, and it also means they’re more likely to eventually turn to their home equity to finance their retirement. After years of sales by the big reverse mortgage lenders, consumers know more than ever about these products and are ready to leverage their home equity for retirement planning and other expenses.

Second, it’s easier now than ever before for originators to get into the reverse mortgage business. It’s no longer considered a completely separate line of business because you can originate these loans with the same technology that lenders already use on the forward mortgage side.

Lastly, originators need to find more products to offer and they need to serve more borrowers if they want to grow. There are reverse mortgage prospects out there — more every single day — and they have families that can be a rich source of referral business for the originators who treat these older homeowners well. Anyone who has watched a parent obtain a reverse mortgage and witnessed the positive impact the loan product had on their life will look favorably on the person who made it possible.

Maturing product

The first significant hurdle that kept forward mortgage lenders from moving into the reverse mortgage market was compliance. It took some time for the rules to come fully into focus and for the specific actions taken by reverse mortgage lenders to satisfy regulators.

Because there was a fair amount of confusion in previous years — among both the lending community and consumers — about the rules, many lenders stayed away and gave rise to a group of specialized lending firms that only sold these products. They used specialized reverse-only technology.

This led industry leaders to think of reverse mortgages as an entirely different business line, similar to how they view auto loans or small-business financing. This made some sense from a risk management perspective.

Today, however, reverse mortgages are a mature product set with easy-to-understand compliance rules that any lender can learn and apply to their institution. Borrowers are also more aware of these products and how they can be used for retirement planning and other purposes.

In addition, today’s next-generation loan origination systems can handle reverse mortgages as easily as forward mortgages. Instead of looking at reverse mortgage products as a completely new line of business with its own infrastructure, staff and silos, lenders are simply making reverse mortgages available to their existing originators. It’s a better strategy in today’s market.

Emotional connections

Research has shown that family members are more likely to recommend high-value products and services to each other, and they’re more likely to accept a referral from family. Relatives tend to trust each other and are more familiar with each other’s financial situations, making them more likely to recommend products and services that they believe will be of value to their loved ones.

Families often share similar experiences and lifestyles, which can lead to a common need for certain products and services. This can make it easier for family members to recommend products and services that they have found to be useful or valuable.

Family members have an emotional connection that can make them more likely to recommend products and services that have been beneficial to them. They may feel a sense of responsibility or obligation to share valuable information with their loved ones.

Recommendations from family members are a form of word-of-mouth marketing, which is a powerful tool for generating new business. Ninety-two percent of consumers trust recommendations from friends and family members more than any other form of advertising, according to Nielsen.

● ● ●

By offering reverse mortgages, lenders have access to a new source of business in a growing market. If their technology allows them to deliver an excellent client experience, these older homeowners will refer lenders to their children. These may be the best and easiest referrals an originator can get, making it worth their time to explore this loan option in today’s competitive market. ●

The post A Close-Knit Circle appeared first on Scotsman Guide.

“Even though tapping a portion of home equity with a reverse mortgage could provide a significant increase in retirement resources for many seniors, the anticipated gold rush to claim this wealth so far remains a trickle.”

Was Mr. James’ situation a blip — a heartwarming story to end a national newscast — or the new reality for an increasing number of seniors? This past February, 89% of seniors (ages 60-75) who participated in a national survey from AAG said they believed the U.S. was experiencing a retirement savings crisis. Roughly half of the more than 1,500 survey respondents said these circumstances were affecting them personally. 

43% rated the condition of their retirement savings as fair or poor.

44% felt they had not saved enough to retire comfortably.

57% said they are either somewhat optimistic or not optimistic that their level of savings will cover the duration of their retirement.

Almost 60% were cutting back on nonessentials to save money.

You don’t have to look far for signs of why the survey participants answered the way they did. Last year, annualized inflation peaked at 9.1%, significantly affecting the purchasing power of many retirees. Investments in the equity and bond markets didn’t provide them with any relief either. The S&P 500 shrank by 19.4% in 2022 while long-term U.S. government bonds lost 39.2%, their worst year on record.

Troubling future

Longer-range retirement projections appear equally disturbing. Today, the percentage of private-sector workers whose only retirement account is a defined benefit pension plan is 4%, down from 60% in the early 1980s. Its replacement, the 401(k), which is designed to move the burden of managing retirement uncertainty to individual employees, hasn’t fully lived up to its promise.

In 2022, the average balance in a 401(k) plan dropped by 20.5%, reducing the typical employee nest egg to $103,900, according to Fidelity Investments. In 2021, U.S. labor statistics showed that 68% of private industry workers had access to an employer-provided retirement plan, but only 51% chose to participate.

“Where could retirees’ additional financial relief come from, so they won’t have to worry about outliving their money? One potential source is home equity.”

Meanwhile, America’s two massive social insurance backstops, Social Security and Medicare, could be insolvent in roughly a decade. The Medicare Hospital Insurance Trust Fund may not be able to cover 100% of its costs by 2029. Social Security could run out of excess reserves by 2034. If the federal government is forced to reduce benefits, more seniors will likely have to dig deeper into their own pockets to cover their retirement expenses.

To their credit, millions of resilient seniors have begun cutting back on nonessential expenses like dining out and leisure travel to stretch their retirement budgets. But these measures, as well intentioned as they might be, are like sticking a Band-Aid on a deep cut that requires stitches. Bigger thinking and solutions will be required to stop the bleeding.

So, where could retirees’ additional financial relief come from, so they won’t have to worry about outliving their money? One potential source is home equity. Homeowners who are 62 and older now have a record $11.8 trillion in equity, or roughly three times the current $3.68 trillion savings deficit.

That’s a lot of money — and it’s good news. The even better news is that homeownership among Americans seniors is widespread. About 80% of people 65 and older own a home today, with an average equity pool of about $300,000. Mortgage originators can help their clients use this equity to live their lives fully in their retirement years, especially if originators are familiar with reverse mortgage products.

Potential lifeline

If you’re a lender or broker working in the forward mortgage space, you’ve likely helped clients refinance for a dozen different reasons. They might have been taking advantage of lower interest rates, moving to more stable monthly mortgage payments, or pulling cash out to help pay for a child’s braces, summer camp or college education. Refinancing was a win-win for you and your clients.

As many of these clients have grown older, their financial focus may have shifted from providing for their family to securing their own retirement, where traditional solutions like cash-out refinances and home equity lines of credit may no longer address their financial needs. After paying off or substantially paying down a mortgage, the last thing they likely want is to commit to another cycle of monthly mortgage payments that extend 15, 20 or 30 years. They’re looking to boost cash flow, not deplete it.

This is where inclusion of a reverse mortgage as part of a comprehensive financial plan may make the most sense. With a reverse mortgage, homeowners can tap some of their home equity while they continue living there, without ever making another monthly mortgage payment. This is possible because a reverse mortgage first pays off the current mortgage, if one exists, then pays out in cash any qualifying equity that remains. Homeowners are still responsible for covering maintenance expenses, property taxes and homeowners insurance, and for complying with all loan terms.

A Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage insured by the Federal Housing Administration (FHA). It’s also a nonrecourse loan, which means that if the loan balance were to exceed the value of the home, neither the borrower nor their heirs are required to pay the difference.

Lingering misperceptions

Even though tapping a portion of home equity with a reverse mortgage could provide a significant increase in retirement resources for many seniors, the anticipated gold rush to claim this wealth so far remains a trickle. Today, fewer than 2% of retirees have taken advantage of what is typically their largest cash asset.

Admittedly, when reverse mortgages were introduced more than 60 years ago, they didn’t get off to a great start. Nonborrowing spouses faced foreclosure if they didn’t pay off the mortgage or sell the home after their spouse moved out or died. Other reverse mortgage borrowers, suddenly flush with cash, found themselves going through most or all of their proceeds in the first year, leaving few funds for the ongoing payment of property taxes and homeowners insurance.

Like a manufacturer announcing a product recall, the industry corrected these program flaws with spousal protections, first-year draw limits, counseling, financial assessments and other consumer safeguards. Despite these and other improvements, the industry still hasn’t fully reclaimed the telling of its own story.

One battle underway is tied to the public perception that reverse mortgages are expensive. But for anyone who has paid insurance premiums, real estate commissions, investment commissions and other expenses for financial services, this claim that is often leveled by competing industries or companies is a red herring. Mortgage insurance premiums add to the cost of an FHA-backed reverse mortgage as they do for a traditional forward mortgage, but in addition to guaranteeing that the borrower will never owe more than the home’s appraised value, they guarantee continued payments to the borrower in the event the lender goes bankrupt.

●●●

America is not getting any younger. More than 56 million adults ages 65 and older live in the U.S. and account for about 17% of the nation’s population, according to census figures. By 2030, when the last of the baby boomers age into retirement, it is projected that there will be more than 73.1 million of these older adults.

If you truly plan on serving even a fraction of these clients for life, then it only makes sense to provide them with a complete array of tools and possibilities for their retirement independence. This should include not just a GoFundMe account but a reverse mortgage too. ●

The post Brighten Their Future appeared first on Scotsman Guide.

About one in three HECMs originated since 1990 remain active today. Despite their comparatively small market size, they have an outsized impact for many senior households. Even though the life expectancy for the average American has declined since the start of the COVID-19 pandemic, the senior population is poised to grow in the coming years. AARP reports that 10,000 people turn 65 each day and this demographic is expected to double by 2050.

“There are more and more senior homeowners that are looking to incorporate the use of home equity into a strategic part of their retirement-income plan,” says Steve Irwin, president of the National Reverse Mortgage Lenders Association, a trade group that represents 300 member companies.

“Some people would say that reverse mortgages, almost by their design, are going to eventually terminate in foreclosure.”

– Sarah Bolling Mancini, senior attorney, National Consumer Law Center

Unlike forward mortgages, reverse mortgages do not require monthly repayments, but this does not eliminate the risk of default or foreclosure. A report released this past February by the National Consumer Law Center (NCLC) concludes that “reverse mortgages end in foreclosure much more often than they should.” Chief among the reasons cited are borrowers who fall behind on their property tax and homeowners insurance bills, as well as heirs who struggle to repay the reverse mortgage once the borrower dies or leaves the home.

“Some people would say that reverse mortgages, almost by their design, are going to eventually terminate in foreclosure,” says NCLC senior attorney Sarah Bolling Mancini, the lead author of the report. “Even though the loan eventually is going to come due and payable after the death of the borrower … it could be satisfied through a market sale, through a short sale, through a deed in lieu.”

The report calls for federal agencies to make several improvements to the HECM servicing process. More specifically, it recommends the FHA add flexibility to its loss-mitigation policies, and it seeks to have the Consumer Financial Protection Bureau include reverse mortgages under existing consumer protections covered by the Real Estate Settlement Procedures Act.

Reverse mortgage borrowers retain responsibility for property charges (i.e., taxes and insurance). In many cases, these costs are paid on their behalf through a life expectancy set-aside (LESA) account. The FHA implemented these accounts in 2015 as part of a financial assessment that determines the borrower’s ability to afford ongoing housing expenses. For example, if a borrower is required to have one of these accounts, is expected to live for 15 years and has yearly property charges of $5,000, then $75,000 is deducted from the loan proceeds.

“We have seen that this financial assessment and the use of these set-asides has dramatically decreased the amount of delinquencies on these reverse mortgages,” Irwin says. “It has been a huge improvement to the program.”

In situations where a LESA is not required and the homeowner fails to stay current on property charges, the servicer covers the expenses. The loan can then go into default if the homeowner doesn’t repay the servicer. Consumer advocates are calling for the FHA to push for repayment plans, rather than foreclosures, in the majority of these cases and for servicers to be initially reimbursed through the FHA’s insurance fund. Additionally, the NCLC recommends that loans with a repayment plan should be removed from default status, thereby reducing the servicing costs and ultimately benefiting the insurance fund.

“There are reasons why homeowners get confused about this,” Mancini says. “They’ve been told that they have no mortgage payment anymore. They’re used to having (taxes and insurance) escrowed. They’re not used to going to the tax assessor and paying, you know, $5,000 a year. And it’s a really large one-time cost for an older adult living on limited income.”

Irwin notes that all HECM loan applicants must complete independent third-party counseling prior to approval. These educational sessions are designed to cover the borrower’s financial responsibilities in detail, which should eliminate confusion around property taxes and insurance.

“We maintain a consumer website, ReverseMortgage.org, which has several consumer guides that we make available to our members,” Irwin says. “We continually have educational outreach to new members, new lenders, on servicing timelines and work to align consumer expectations to the realities of how these products are serviced.”

Mancini maintains that the quality of counseling varies by company. She has heard reports of borrowers who’ve received nothing more than a 30-minute phone session. Although loan originators are not responsible for these tasks, they should be able to serve as knowledgeable, trusted advisers.

“I do think that originators could play a big role in saying, ‘Look, you’re going to need to get to know your servicer. And by the way, it might change more than once, but here are the things that can go wrong if you’re not reading the letters from them and not picking up the phone when they call,’” Mancini says. ●

The post Consumer advocates raise concerns about reverse mortgage servicing appeared first on Scotsman Guide.

Overall wariness

Trusted advisers

Enormous opportunity

The post This Gold Mine Remains Largely Untapped appeared first on Scotsman Guide.

Today’s economic realities mean that many baby boomers need their equity to adequately retire with a high quality of life.

Trusted adviser

Lingering misconceptions

The effect of women earning less translates into having less money in retirement. This naturally leads to women looking for creative retirement solutions.

Financial flexibility

Potential uses

The post The Golden Age appeared first on Scotsman Guide.

One group that will help reenergize the reverse mortgage, which may come as a surprise, is the adult children of older Americans. Many of them are more favorably inclined toward reverse mortgages than their parents.

Wealth management

Emerging market

Safer product

The post A Remarkable Story to Tell About Reverse Mortgages appeared first on Scotsman Guide.

The latest release of the NRMLA/RiskSpan Reverse Mortgage Market Index revealed that homeowners 62 and older saw their housing wealth grow to $7.82 trillion during the third quarter. That’s a quarterly increase of $121 billion, or 1.6%, bringing housing wealth to its highest level since NRMLA began keeping track in 2000.

The gain was chiefly driven by an estimated growth of $149 billion, or 1.6%, in senior home values. That growth was offset by a $28 billion increase in mortgage debt held by senior citizens.

Senior housing wealth has been on an upward trajectory since 2011, per the NRMLA’s data. The metric exceeded $7 trillion for the first time in the third quarter of 2018.

Quarterly growth had slowed to between 0.3% to 0.6% in 2019 before gaining steam again last year. And the market has responded by adding diversity in products as gains have accelerated, NRMLA president Steve Irwin said.

“The reverse mortgage marketplace has greatly expanded over the past year to include more private-label products that offer consumers more options and greater flexibility compared to the FHA-insured Home Equity Conversion Mortgage,” said Irwin. “While the HECM still accounts for over 90% of the market, we expect private-label reverse mortgage distribution channels to expand over time.”

Irwin tolled the bell for the importance of senior equity in October, noting that the responsible use of equity may be an option to help seniors stay financially secure as economic risks grow due to COVID-19. A recent Risk Retirement Index published by Boston College’s Center for Retirement Research reported that 55% of working-age households are at risk of maintaining their pre-retirement standard of living because of COVID-19.

The post Senior housing wealth reaches record $7.82 trillion appeared first on Scotsman Guide.

Financial challenges can prevent or limit a retiree’s goals from coming to fruition. These goals can include maintaining good health, getting involved in hobbies or volunteering, overseeing home improvements or modifying the home to age in place, enjoying family, traveling or maybe even starting a new side-hustle business.

Because the retirement landscape can be rocky, people need to learn about using home equity as a tool to assist with retirement goals. Originators can help their clients by educating them on reverse mortgage products and services.

Unforeseen needs

Whether retirement planning was not as successful as one hoped or an unforeseen need for retirement reserves occurred, many retirees are looking for different ways to fund retirement goals without depleting hard-earned assets. Many thought they were comfortable with their saved assets when they realized it was not nearly enough.

Some people have assets in other aspects of their financial lives and would rather not deplete them due to market fluctuations and/or penalties. Here are some trends that may surprise you:

• Less than 40% of retirees are financially prepared for retirement.
• About 55% of households ages 55-64 had less than $25,000 saved for retirement.
• Many people entering retirement are still paying a mortgage on their home.
• Some baby boomers are part of the sandwich generation, financially assisting their children and parents in tandem.
• Long-term care will become an even more needed resource and health care cost trends show expenses are sure to increase.
• The “silver divorce” trend — the divorce rate for couples over 50 has increased 109% since 1990.

Opportunity awaits

Sales professionals in the mortgage, real estate and financial adviser fields need to be somewhat focused on the retirement market. If they aren’t, they could be missing a huge opportunity to assist the largest demographic that will need housing choices and retirement resources in the years to come.

Reverse mortgage programs can be an amazing opportunity to help retired homeowners with many things. These loans can be used to purchase a new home, fund long-term health care, assist family members, supplement retirement income or just to have a standby line of credit.

Reverse mortgages were originally popularized in the mortgage market in the late 1980s and early 1990s. There are a variety of reverse products out there to fit the needs of many individual homeowners. Home Equity Conversion Mortgages (HECMs) from the Federal Housing Administration (FHA) and other lender-specific, proprietary reverse products have a place in the market. Proprietary reverse mortgage programs are usually designed to accommodate higher-value homes or properties that do not fit under the HECM criteria.

Purchasing a new home with a reverse mortgage instead of a conventional loan may provide the retiree with an opportunity to almost double the home value they can afford and to have no monthly mortgage payment obligation.

Continuing education

Whether you are a mortgage professional, or any other business professional who has retired clients, knowing about reverse mortgages can help them and generate more sales opportunities for you. These loans have become sought-after products by real estate finance professionals.

Many reverse mortgage brokers or loan officers are partnering with Realtors and providing them with an education on how to double the number of sales and listings for a large demographic that will need housing choices. But obstacles and misconceptions still resonate in the reverse mortgage industry. Some homeowners, family members and business professionals have misconceptions about these loans — such as the homeowner must give up ownership rights, their heirs incur debt or the home needs to be debt-free.

Continuing education is helping the reverse mortgage industry make headway and is allowing people an opportunity to see how a reverse mortgage may be a good choice for those preparing to have the retirement they truly want. Allowing front-line professionals the tools and education they need to help retirees obtain their goals is what we are all working toward.

The conversation is changing around reverse mortgages to ensure there are relationships to educate retirees about these resources 

Serving others

The conversation is changing around reverse mortgages to ensure there are relationships to educate retirees about these resources. The reverse mortgage industry is an ever-changing pathway that is strategically flexible to sustain the longevity of its intention. It is exciting to see the number of people who are engaged in pursuing more information once they learn what reverse mortgages can do for their clients.

Lending institutions should continue to keep the doors open for educating and coaching sales professionals. Being reminded of the need, as well as the untapped market that can participate in a reverse mortgage, will always require new and creative ways to ensure more people are aware of the benefits.

Mortgage originators and other business professionals can experience the next level of sales by introducing their clients to reverse mortgage products. It’s amazing how many companies are still transaction-based, and many don’t know they are missing the most important aspect of the mortgage business — service to others.

The post Reverse Mortgages Pave the Way Ahead appeared first on Scotsman Guide.