April 30th, 2017
In recent years, the reverse mortgage program has undergone substantial policy changes as the product has been revamped and fine-tuned to better meet the needs of older Americans. Many of those who have made a living originating HECM loans have weathered the changes, but it hasn’t been without its challenges. For seasoned HECM loan officers, the work is not what it used to be.
“Tighter regulations have resulted in tougher underwriting standards that have made most HECM loans far less routine,” says Bill Smith of Reverse Mortgage West. “Complaints from my colleagues that ‘every loan is a problem loan’ are much too frequent and clearly not what used to be when I started.”
Smith, who has been originating HECMs for 15 years, says regulatory requirements have added considerable length to a loan’s turn time.
“The requirement that counseling precede the application has made the sales cycle far less efficient. Prior to the regulatory change, I was able to qualify most prospects over the telephone and arrive at the first appointment with an application ready to sign. Probably 90 percent of my loans were one-time visits to close. Now, two home visits are required, making the process less efficient,” he says. “This aggravates me because I do not see any clear advantage for the borrower.”
Less Originating, More Explaining
Beth Paterson of Reverse Mortgages SIDAC, a division of Greenleaf Financial, agrees. “A lot more work and a lot more time are involved in closing a loan,” says Paterson, who has been in the business for 18 years. “Now, with Financial Assessment, we spend a lot more time trying to get the documents needed. We need to explain what a LESA [Life Expectancy Set-Aside] is. There are a lot more conversations and much more legwork involved.”
Some LOs say explaining all the rules and regulations to a borrower can be a challenge.
“Putting FA into layman’s terms for my clients can be tough,” says Mark Draper, a 10-year HECM LO with Amity Mortgage. “They just want to know they are being treated fairly and it’s going to help them.”
Smith says reverse originators now need to do a lot of legwork to close just one loan, a fact others outside the profession may not recognize.
“People may think we are well paid for doing little,” he says. “In truth, they cannot know how many homeowners we must advise and counsel just to secure one loan that actually closes.”
Seeking New Audiences
Florian Steciuch, a HECM specialist with Retirement Funding Solutions who has been originating for seven years, says he has altered his approach in order to adapt.
“I’ve turned my focus to financial planners and estate planners, who are open to learning how a HECM can be used for retirement planning. Rather than marketing to the general consumer, I reach out to specific professionals,” Steciuch says. “Most advisors welcome the Financial Assessment and feel the HECM is a safer product with these changes. With a booming real estate market, serving Realtors and builders has become a larger part of my efforts.”
But getting through to these professionals can be difficult. “The greatest challenge is getting the commitment from financial planners other professionals, like Realtors and builders,” Steciuch says. “They still view the HECM as a last-resort option, even though that changed years ago.”
Outcomes Worth the Extra Work
While increased regulations may have complicated the loan process, HECM specialists are traditionally invested in helping their clients, and this aspect of the work has not changed.
“We are more than loan officers who calculate DTIs or chase conditions. We listen to the sometimes very urgent and sensitive needs of our older borrowers,” Steciuch says. “We understand retirement planning, cash flow, home safety. Of course, we never provide financial, legal or health care advice, but we do understand them. That makes us more than just an LO. We are professionals who can provide life-changing solutions.”
Though some may enumerate the challenges of the work in today’s post-FA world, they are just as quick to list the rewards of the job as well. For many reverse mortgage originators, helping clients solve their financial problems offers a reward great enough to outweigh the challenges faced along the way.
“The reward for me is and always will be that feeling of satisfaction when you’ve helped someone obtain a reverse mortgage and see the financial stress leave their body,” Draper says.
Steciuch says seeing his clients’ relief motivates him to keep at it. “At my last closing, the borrower clasped her hands over mine and said, with a tear in her eye, ‘Thank you. The pressure is lifted from us.’ All the no’s I face each week are worth that one yes.”
Paterson says helping seniors incites a passion that is her driving force. “As the saying goes, if you love your job, you never work a day in your life. That’s how I feel. It’s not work to me; I’m really passionate about it. To me, it’s a ministry.”
“… and to me,” Warren Strycker