Mastering the art of HECM origination

Posted On October 1, 2018


by Webmaster

Reverse mortgages are not your average loan product. They cater to a specific segment of borrowers and often require a lengthy and consultative sales approach.

Add to this the fact that originators must walk a client through a rather complicated loan process and work through layers of misconception harbored by both clients and their advisors, and it’s easy to see why finding success in this market takes a special set of skills.

But as seniors amass record-breaking levels of home equity and express an overwhelming desire to age in their homes, it’s also easy to see why this product could eventually rack up more volume as Baby Boomers continue to retire.

In fact, several mortgage companies are leveraging their HECM know-how to teach all their LOs how to originate these loans, rather than segregate their forward and reverse divisions as many have done in the past.

But traditional LOs will need to learn the skills required to originate such a specialized loan. To decipher what it takes to find success in this field, we’ve polled three of the industry’s leading trainers for their tips.

These veteran educators have worked with thousands of LOs around the country to help them hone their skills, and they’ve shared their five best tips on what it takes to be a top-tier HECM LO.
Tip No. 1: Know your stuff.

You can’t sell this loan if there are gaps in your knowledge. All three of our expert HECM trainers agreed that it’s essential to know the nuances of this product inside and out in order to find success in this market.

“This is not just another mortgage product, and some of the terms will be unfamiliar at first,” said Dan Hultquist, VP of education and organizational development at Live Well Financial.

“Understand the strategic uses of the product,” Hultquist said. “Every HECM is different, but there are certain core strategies that will get the job done.”

Lorraine Geraci, VP of learning and development at Finance of America Reverse, agreed.

“Cultivate a deep understanding of the products available,” Geraci said. “Reverse mortgage products have expanded beyond traditional HECMs and originators can demonstrate that they are valuable allies to their clients by presenting them with all the options available and structuring a loan program that helps them achieve their retirement goals.”

Hultquist said if you’re stumped, you’re likely to find someone in the field willing to help.

“Find your HECM buddies,” he said. “We are a very collaborative group. You’ll find that even your competitors will help you structure a deal.”

Tip No. 2: Cultivate referral partners, not referral sources.

Many of those who have built a solid HECM business have done so by building relationships with professional partners, like Realtors, financial advisors, builders, attorneys, and CPAs.

But while a recommendation from a trusted advisor is a great way to earn a client’s trust, it’s not easy to build these relationships.

“The first thing you need to recognize is that they are referral partners, not referral sources,” Hultquist said. “A ‘source’ implies that the benefit is very one-sided. But when you understand how both partners can succeed in producing desirable outcomes for the consumer, everybody wins.”

Geraci said originators have an excellent opportunity to build strong referral networks by connecting with professionals who could use HECMs to grow their business.

“As real estate agents find themselves increasingly squeezed by new technologies and platforms, they are finding opportunities to demonstrate their value to clients by expanding their knowledge of reverse for purchase and as a result selling more properties better suited to their boomer clients,” she said.

“Financial advisors are becoming increasingly aware of and open to learning about how home equity and reverse mortgages play a role in longevity planning,” Geraci continued. “Homebuilders are broadening their potential client base with active adult communities and new construction.”

“Originators who offer education and showcase benefits that assist and influence the older adult population can help create valuable relationships with referral partners,” Geraci added.

Craig Barnes, an education leader at Reverse Mortgage Funding, said it’s important to be available for your partners and remember that it takes time.

“Be your partner’s go-to guy (or woman)!” Barnes said. “You may not get a deal the first, second or third time they ask you to run numbers or ask you to speak with one of their clients, but eventually, being the guy who answers the phone when they call will pay off.”

Tip No. 3: Share success stories.

It’s natural for a client to have reservations about the loan. One great way to overcome this is by sharing stories of clients who have found tremendous benefit in their decision to get a reverse mortgage.

“The best way to overcome a client’s negative reaction is to tell stories about how a reverse mortgage changed the life of past borrowers,” Barnes said.

Geraci seconded this. “Originators should be prepared with case studies and testimonials that describe the positive impact reverse mortgages have had on the more than 1 million homeowners who have leveraged home equity to get to work on retirement.”

Tip No. 4: Stop talking, start listening.

Reverse mortgages require a consultative sales approach, and both Barnes and Geraci stressed the need to listen to your clients’ needs and concerns.

“Stop talking – let the client do the talking, let them tell their story,” Barnes said. “You will learn more about their needs and financial goals by just listening.”

Geraci said originators must understand that it’s important to create a trust-based environment where clients feel heard.

“Great originators actively listen to the concerns that are raised and articulate their response with a sincere and genuine focus on providing access to products that truly serve clients’ stated needs.”

Tip No. 5: Be patient.

It takes much longer to originate a HECM than it does a traditional mortgage loan, and there’s often a good amount of hand-holding involved. And that’s why our trainers remind LOs to be patient.

“Most HECM clients do not have the sense of urgency of a first-time homebuyer,” Barnes said. “Be available to review (over the phone or in person) information or docs multiple times with the client as well as their trusted advisors.”

Geraci backs this up.

“Understand that while the sales cycle of a reverse mortgage is different and often longer than a forward mortgage,” Geraci said. “The process still requires the education, accessibility, and patience that originators are used to supplying for other types of clients.”


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