Making Ends Meet: Lifesavers Part 2

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Making Ends Meet With Reverse Mortgage Help

Reverse Mortgage To Help Pay DebtReverse mortgages offer one solution to many of today’s pressing financial issues, such as dwindling retirement funds, minimal Social Security checks (next year’s increase is just a drop in the proverbial bucket), necessary home repairs/improvements, and much more.

Grateful reverse mortgage qualifiers eagerly express how a reverse mortgage helped them make ends meet. Here’s one woman’s thank-you letter to her reverse mortgage company (Security One Lending):

“I’m writing to let you know how satisfied we are with our reverse mortgage. You know how I hesitated in the beginning. But you never pushed! You and your colleagues were so supportive. You explained over and over again so that I fully understood the process.

“We were in dire financial stress, running low on money at the end of the month, not able to save any, and you showed us a way out. Thank you so much.

“I will say Kathy (Halliday) is an invaluable assist to your company. She was a lifeline when I needed one. Everyone I met or worked with was so considerate and helpful. My! How you must have gotten tired of my phone calls! But, none of you ever left me hanging.

“Yes! We would recommend a reverse mortgage to all our friends, as long as they choose your company to handle it. It has freed up our lives and given us a better quality of life in our retiring years. Thank you for your direction and guidance.”

Reverse Mortgages Help pay Debt

The Redding Record Searchlight reported how two senior men found reverse mortgage to be the answer for their financial needs. Frank Cheatham, an 80-year-old Redding resident who owns two paid-off duplexes, opted for a reverse mortgage to help his son pay down debt. Since his son would inherit the properties someday, the reverse mortgage made use of a future bequest to solve an immediate need. Cheatham also used some of the reverse mortgage loan for home maintenance.

For 68-year-old Burney resident Rod Armstrong, a reverse mortgage became the means to supplement his Social Security and other retirement income. The retired airline pilot says he and his spouse updated their home’s carpeting, and are planning a few trips as well.

Both Cheatham and Armstrong deposited their reverse mortgage loans into accounts they can draw from as the need arises — a smart move.

AARP Regulations – Have they gone too far?

That may be just what future reverse mortgage borrowers may need to do to satisfy federal regulators before getting the loan. AARP recently called for more ‘special protections’ to help prevent serious harm (full story here). What is puzzling is the mixed messages that often come from AARP regarding reverse mortgages; first endorsing and then later criticizing.

When it comes to fraud is our industry rife with it? AARP’s senior attorney cited high fees that ‘scammers’ can use to suck away people’s home equity. Really? Are we on the same page? HUD restructured the loan origination calculation for borrowers lowering fees dramatically from 2% of the homes appraised value some time ago not to mention the introduction of the HECM Saver last October. When it comes to fraud do we have any real evidence that shows a disproportionate problem with reverse mortgages versus traditional loans?

Certainly high fees were a black eye for reverse mortgages but that issue has long been settled by both HUD and the market with mandated loan origination reductions, lower costs to consumers due to the secondary market and new low cost products like the Saver. Are high fees the risk to borrowers exposing them to losing their home or is it a lack of education or responsibility of the borrower to meet the obligations of insurance and property taxes? I would venture to say it is the later, and steps have been taken to reduce that risk to both borrower and lenders alike.

Beyond mandatory counseling, duplicate warnings, disclosures and all caps ‘buyer beware’ statements in an application what additional protections really can be practically put in place? No one would disagree that consumers deserve sound product education and protections but in the end will they need to chew through barbed wire to get a reverse mortgage? What segment of borrowers could potentially be hurt the worst from regulations that treat the HECM as a toxic loan of last resort and what message does this send to our new segment of higher net worth borrowers who may be looking at a HECM for the first time?

Lifesavers Part 1: Preventing foreclosure

Preventing Foreclosure

How To Prevent Foreclosure With Reverse MortgagePersonal success stories are a powerful vehicle to imprint the value of a product or service in potential clients’ minds. The following true tale will brighten your prospects’ holiday season.

Reverse Mortgage To Prevent Foreclosure

Reverse mortgage was a lifesaver for 77-year-old Isidoro, who had been in foreclosure due to the current economy. By the time he contacted Security One Lending, Isidoro was on the verge of losing his home to foreclosure within a few months. He was faced with moving out of his home and trying to find a rental somewhere on a Social Security income of just $800 a month, which would have left him with precious little money for food and other necessities.

Security One’s loan advisor quickly realized that the home’s value was in decline — something many Americans are experiencing now. Chase Bank had tried for the better part of a year to “short sale” the home, with no offers. Fortunately, the bank has a program to accept a reverse mortgage in lieu of a short sale.

Security One Lending negotiated with Chase Bank over several months — and several foreclosure extensions — to ultimately shave a whopping $182,000 from the principal note balance. Additionally, the loan agent was able to drastically reduce the reverse mortgage loan fees to allow the client to qualify, and have his existing Chase Bank loan paid off in full — which kept him from losing his home.

Isidoro retains full title to his home, and can never lose the house due to non-payment. That’s a true holiday gift!

In Part 2, we’ll hear from seniors for whom reverse mortgage means relief from financial stress.

 

House Rich, Cash Poor?

Meeting Seniors Financial Challenges

Many people look forward to retirement as a time of leisure, when they can finally relax and do what they wish: take a trip, play golf, or embrace a lifelong passion such as music or art.

But if they’re hurting for money, none of these dreams will be easily realized. A recent study from Banker’s Life & Casualty found 14 percent of Baby Boomers have no retirement savings, while 55 percent of middle-income Boomers’ retirement accounts have balances under $100,000. The good news: many of these soon-to-be-retirees have significant equity in their homes.

The evolution of the reverse mortgage industry can serve the new Baby Boom seniors, who may be bewildered to suddenly find themselves house rich, yet cash poor.

Here are three key elements of reverse mortgages, then and now:

  • 1961: The first reverse mortgage is created by a savings and loan executive as an act of kindness, to help a struggling widow make ends meet;
  • 1989: Reverse mortgages become a federally insured program through the Housing and Community Development Act, signed into law by President Reagan;
  • 2000: HUD begins requiring third-party reverse mortgage counseling as a consumer safeguard. Shortly thereafter, telephone counseling (in addition to in-person counseling) becomes available.

Today, with reverse mortgage information available through AARP and HUD, and backed by FHA insurance, reverse mortgages are a viable way for qualified seniors to tap their home’s equity to meet living expenses in later years.

Two common concerns you may also want to address at the outset:

  • A homeowner can’t “outlive” the life of the loan. As longevity spirals upward, this has become a frequent misperception. There is no reason for a client to fear losing their home with a reverse mortgage, as long as at least one borrower remains on the property, and pays the property taxes and insurance on time.
  • The reverse mortgage never has to be repaid by the aging homeowner, unless and until the property owner decides to move or sell, or vacates the home for more than one year.

Is Anybody Home? Focus In Client Relationships

Undivided attention

During a recent consultation with a coaching client the discussion turned to the topic of focus and how to stay on task when there are so many potential distractions in a given day. This got me thinking……

Having been a speaker as well as an attendee at many mortgage industry and senior related functions, I can’t help but notice how more and more, when the speaker is presenting, much of the audience is engaged in other activities. No this is not a commentary on the speaker himself, quite the contrary. It seems that we are all so concerned about staying connected 100% of the time, that we could miss a good presentation or discussion. When you are part of the audience, you have taken the time out of your day to attend a presentation- so really be there! You just may walk away with a nugget of marketing information that will help you build your pipeline. Put down the blackberry, the i-phone, the Droid, the (fill in other name of gadget here) and be there.

Client Focus

The same goes for the time you are spending with your senior clients. Personally, I love it when my clients tell me the story of their life. It often affords me great insight into how to best present the reverse mortgage and its benefits. I am not looking at my watch (or worse, my phone) while we are talking but rather devoting my full attention to them. I take notes and nod from time to time to show that I am paying attention. I ask leading questions to spur further conversation. Being 100% focused on the client during any interaction distinguishes you as a true professional, not just another loan officer. Try this in your day to day appointments, put down the phone and focus on what is taking place right there and then. You just might learn something!

 

How to Build Trust Part 2: Trust and the Aging Process

The process of aging makes one more vulnerable when it comes to trust

While it’s true that people don’t change dramatically just because they grow older (see Marketing to the Mature Homeowner/Part 1), there is one area in which aging makes us more vulnerable: trust.

As people age and watch spouses, friends and family members die, the lyrics from The Cure’s tune, Trust, may express how they feel: There is no one left in the world that I can hold onto / There is really no one left at all. Lack of a support system can and does affect older adults psychologically.
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The response to these transitions can either be fear, in which seniors become less confident in people overall, or outreach, where, in their desire to connect, they misguidedly place their faith in everyone from the caller who tells them they’ve just won a sweepstakes, to the salesperson who suggests a risky investment.

Because such unscrupulous individuals and businesses often prey on older adults’ loneliness or hope, it behooves reverse mortgage professionals to understand the concerns unique to this cohort group.

To build a strong relationship with older reverse mortgage prospects:

  • Allow plenty of time to get acquainted. Regardless of whether they seem secure or anxious, many mature adults (particularly “older” seniors, 75+) love having a new audience for their stories, especially those revolving around something as precious as their lifelong home;
  • Develop a strong sense of their personal situation. Is a reverse mortgage a prudent move for them — or are they simply enjoying the regular contact visiting with you offers, even if this takes place over the phone?
  • Go slowly. In our frenetic world, it’s easy to forget that the spryest senior will likely operate at a somewhat slower pace than you do. Be willing to explain information more than once, and in different ways, until it’s clear your prospect comprehends all the specifics.
  • Reach out. Going the extra mile might be a cliché, but doing so never is. If a senior turns out to be an excellent reverse mortgage prospect in every way, yet clearly thrives under your attention, reach out: make a home visit if possible, bring a small gift, find a referral for another need they mention. These demonstrations of caring will not only help seal the deal; your kindness also boosts your client’s quality of life.

Reverse Mortgage Relationships with Seniors

How to Build Trust with Reverse Mortgage Prospects: Part 1:

Communication is Key

You can hold a home in living trust, or create a trust fund for the next generation. But building an emotional “trust fund” with potential reverse mortgage clients — one you can draw upon throughout the sales cycle — is not as simple as a monetary investment. Creating trust calls for a wealth of skills that must be both genuine, and polished to a high gloss.

Building trust is an art form. The average reverse mortgage sales cycle until purchase is nine months — the amount of time it takes for a baby to be born. It’s an apt metaphor. In birthing their reverse mortgages, the seniors you serve are initiating a major life change that can be thrilling and scary at the same time.

What’s more, the manner in which reverse mortgage professionals interact with prospects is changing, from face-to-face “meetings at the kitchen table” to Call Center referrals, where you may never see your prospect in person. While Baby Boomers are often more comfortable making purchases by phone or even over the Internet than their forebears, it’s also true that one’s home is typically the largest asset someone owns, and transacting a reverse mortgage with a faceless originator requires a high level of trust in the person, as well as the process.

Here are several keys to developing client rapport:

Be highly knowledgeable. The more you know about the nuances of reverse mortgages, and how these options affect your target market, the easier it will be to build a trust-based relationship.

Communicate clearly and honestly. Share the disadvantages as well as the advantages of a reverse mortgage, e.g.:

  • Do your prospects understand that the consuming equity from a reverse mortgage would otherwise be passed to their heirs or estate?
  • What if they want or need to move due to health issues or changing priorities, just a year or two after securing a reverse mortgage?

Listen deeply to their story. Why is this couple or individual looking into a reverse mortgage now? What’s driving them? This is your best starting point.

In Part 2, we’ll look at factors that influence seniors’ ability to trust, as they grow older.
Reverse Mortgage Trust, Build Trust with Reverse Mortgage Prospects

The truth about relocating: Marketing to the mature homeowner part 4

Senior Moving“When I retire I plan on moving to a smaller home.”
“When I retire I’ll relocate to be closer to the kids.”

Although people may make similar statements in middle age, the reality is quite different. One study found the general move rate for seniors aged 55-64 to be just 7.4 percent per year. Clearly, while the idea of relocating to a senior-centric area (such as Florida) or to be nearer adult children might appeal, the pull of the home where they’ve raised those children, built a life, entertained their friends, and created a lifetime of memories is often stronger.

This is a boon for reverse mortgage professionals, who can help people avoid having to sell their memories (i.e., their home) in order to generate sufficient cash flow for their golden years.

There are emotional and logistical issues to moving and/or downsizing, as well as financial considerations. For some people, moving makes a lot of sense: the house is just too big, or their health isn’t up to caring for it. For the vast majority, however, aging in place (see our series on mature homeowners) is the keynote for savvy seniors, thus making them ideal reverse mortgage leads.

To better understand your target market, consider that leaving their long-term homestead means:

  • Emotional upheaval. Their house holds a lifetime of memories, as does the neighborhood. They’ve built relationships with everyone from the grocer to the librarian to their auto mechanic; it can be as difficult to let go of these peripheral connections as it is to say goodbye to cherished friends.
  • Relinquishing friendships. It’s harder to meet and form new friendships as we age, partly because we don’t have the built-in people access we did when we were younger (through school, work, civic and community activities, health clubs, etc). Some seniors may have decades-long friendships in the town where they’ve lived all their adult lives; losing these friends at this life stage could precipitate depression.
  • Logistics. Not only does relocation — especially to a smaller dwelling — necessitate selling, storing, or giving away precious possessions (a huge task in itself), there’s also the matter of adjusting to a whole new area, and choosing a new doctor, dentist, hairdresser, grocery store, etc. Many people can find these tasks daunting, depending on their age, mobility and overall health.

Thus, in marketing reverse mortgages to the mature homeowner, it’s wise to recognize and acknowledge their choice to stay put, for all these reasons and more. Your reverse mortgage prospects will feel validated in their decision — especially knowing that the equity in their beloved home can help support them as they grow older.

Cookie-Baking Granny … Or Purple-haired Artist? Marketing to the Mature Home Owner / Part 3

In the Leave It to Beaver and My Three Sons era, grandmas wore aprons, baked mouth-watering cookies, and indulged their grandchildren in ways mom and dad would not. Grandpa might have been a bit gruff, but his grandchildren knew his arthritis was acting up, and he loved them even if he couldn’t run and toss a ball like dad. Had reverse mortgages existed back then, our grandparents probably wouldn’t have known what to do with them.

Welcome to the third millennium. Lillian, age 83, sports fuchsia-streaked hair and a dry wit. After lovingly nursing her husband through a long illness, followed by a grieving period, she’s now so busy she doesn’t have a lot of time to chat.

She’s creating charcoal portraits of the hospice staff that cared for her beloved during his final weeks. (Lillian only discovered her artistic talent at 70, when she enrolled with her daughter in an art class). She also tutors several high school students, and participates in a discussion group at the local college. She often eats meals out because she hasn’t time to shop, cook, and keep up with all her activities. Fortunately, she has the financial freedom to enjoy her unorthodox lifestyle, unfettered my monetary concerns.

Lillian is by no means unusual among today’s dynamic elders. (See previous post, Marketing to the Mature Home Owner / Part 2 . Though some seniors may still live as our grandparents did fifty years ago, many more are coming into their own late in life, taking up hobbies they’ve just discovered, like Lillian, or those laid aside while raising a family and working long hours. The calendar may call them “old,” but they’re still giving younger folks a run for their money, pun intended.

The best way to reach these reverse mortgage prospects? Remember that people don’t usually change dramatically just because they age; they simply become more of who they’ve always been. So in marketing reverse mortgages to 70-plus homeowners, appeal to their independence and interests, engage their intelligence, and you’ll be rewarded with a concomitant interest in reverse mortgages — and some wonderfully unique new clients.