Shutting Down: Why many reject the HECM

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The hurdles to increased acceptance are complex

Today there is an estimated $4.4 trillion in home equity for those 65 and older, many who are woefully unprepared for retirement. As HECM endorsements continue to underperform years past, many ask why more eligible homeowners do not get a reverse mortgage.

A recent report from the Urban Institute reveals some of the underlying causes of homeowners reluctance to get a reverse mortgage despite the potential benefits. For years our industry has generally accepted the statistic that a mere 2% of eligible homeowners. However, last summer a MIT study provided a more detailed summary. Analyzing over 3,700 retired households with a loan to value ratios less and 40%, they found 55% would be eligible for a HECM. The bottom line, 12-14% of all retired households in the U.S. are eligible for the reverse mortgage.

The DC think tank, the Urban Institute, published a report entitled ‘Seniors’ Access to Home Equity’, which determined that adults 65 and older control $4.4 trillion of the total $11 trillion held by American homeowners. With nearly half of households in this group having zero retirement savings why are more not seizing the opportunity to fund their retirement years using a reverse mortgage? The primary factors, the report shows, are

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When They’re Ticked Off


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angry-happy6 keys to win back angry customers

It happens, or as a bumper sticker says… Despite your efforts, systems and organization it will happen- your clients will get ticked off- at you! It’s a mix of disappointment that all your safeguards didn’t prevent the situation in the first place coupled with the stress of dealing with an angry homeowner. How do you mend the relationship?

How can we effectively deal with unhappy, angry or disappointed clients? Here are a few tips:

1. Isolate the issue. What is it specifically that triggered an angry reaction? Was it a lack of communication? Unmet expectations? A misunderstanding of the reverse mortgage? You must first know what the cause is before you jump in to fix it.

2. Lose the ego. It takes a strong person to admit when they…

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Overcoming Cost Objections

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reverse mortgage newsBefore you discuss costs you better have done this first…

Cost objections. There as certain in sales as the sun rises in the east. John Luddy shares how to overcome cost objections and why you may be getting them in the first place.

About John Luddy: John has trained reverse mortgage professionals how to be successful when sitting face-to-face at the kitchen table with prospective HECM borrowers. Norcom is looking for qualified loan officer candidates. To learn more call 1-860-507-2582 or email John Luddy here

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Purpose, Connection, Expansion and Love



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Closing the Gap / Part 2

What is “work”? More than anything, for elders, it means a sense of purpose and connection: feeling useful in a social environment. We don’t stop wanting to make a contribution simply because we’re older, as seniors themselves make clear in this compelling 7-minute video, A Sense of Purpose.

reverse mortgage newsThe need to feel needed

Created by high school students (no generation gap here!), the video describes how a forward-thinking small business owner hired elders in a nearby senior living facility to knit handbags for her company. The seniors were so enthusiastic about the opportunity to contribute and earn income from home, they even named themselves: The Purlettes. As the Dalai Lama pointed out, “We all need to be needed… Selflessness and joy are intertwined. The more we are one with the rest of humanity, the better we feel.” The business owner paid her contributors on a piece rate basis, rather than hourly, in order to meet their needs.

However, outdated Department of Labor laws that require employers to pay an hourly wage took away a “golden” opportunity for senior income and purpose. The seniors themselves were vociferous about the derailment: “This is the new manufacturing model. We’re seniors, not machines. We can’t be doing this eight hours a day.” In seeking to “protect” workers, the federal government destroyed a model that gave the elders purpose, connection, joy, and income.

There is no separate law for senior employment that addresses their unique needs. One 95-year-old Purlette said the message she’d send to the Labor Department would be, “Open your eyes. What you have done is a serious injustice. You have taken discretionary income away from a huge number of people, just to follow a narrow law that does not apply to us.”

Act Up

Mirroring nonagenarians Betty White and Norman Lear, who are still plying their trade with aplomb, a group of long-retired Broadway entertainers living in a New York retirement community find purpose — and a great deal of hilarity — diving into a production of Shakespeare’s A Midsummer Night’s Dream.

Still Dreaming, the award-winning film about this elder troupe of troopers, explores the powers of creativity, and how engaging in art-making can deeply enrich our lives at any age.

Closing the gap requires us all to realize, as reverse mortgage professionals do, the truth that older people are just younger people with accrued wisdom — and a few more wrinkles to show for it. By adapting to their needs, just as we do with babies and children, we enliven elder lives with the deep connection, purpose and expansion they crave.

Bringing the world to them

Another heartwarming example: a 67-year-old man and his 58-year-old bride (seniors themselves, according to AARP) chose to wed at the groom’s 92-year-old mother’s residence — which happens to be a care community. The couple said they wanted his mother to be part of their wedding day, so they brought the ceremony to her.

The site’s executive director, staff and residents wanted to make sure the day was “unforgettable” for the happy couple. Residents baked the cake for the reception, and the local hospice chaplain officiated. This small effort to be inclusive of an elder’s needs had a positive ripple effect on numerous people connected with the event.

We’re becoming increasingly adept at using our existing technology to help seniors stay engaged. Television, for instance. Many seniors, especially those who live alone, have the TV on 24/7 for companionship, but it’s a passive form of entertainment.

Now a device called Any TV Companion transforms TV into true connection. Any TV Companion hooks up to the set, where a caregiver or family member can download the mobile app. After that, the television becomes interactive: family members can communicate with and keep tabs on their loved one across the miles via the TV. Bonus: like other elder care technology, the device sends an alert to the caregiver’s smartphone if it detects a medical issue.

With creative and caring people involved in elder lifestyle solutions, the so-called generation gap vanishes. Instead of being pasture-ized (i.e., put out to pasture), mature adults are being integrated into the tribe, where they belong.

The Origins of the Biggest Reverse Mortgage Myth

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Here’s where one of the biggest myths came from

reverse mortgage newsThe best lies have an element of truth in them. Perhaps the truth serves as the sugar coating on a poison pill that has infected the minds of many older homeowners who fear they would sign over ownership of their home if they chose to get a reverse mortgage. Where did such an urban legend begin? Does it have any historical merit?

The best place to begin our journey in seeking the truth is online. Here are several articles we found. The majority of the confusion is rooted in early versions of proprietary, or privately issued, reverse mortgage products. Many of the loans had shared appreciation clauses.

Another factor adding to the confusion of home ownership with a federally-insured reverse mortgage (or HECM) is the Deed in lieu of foreclosure. In its simplest definition, a deed in lieu of foreclosure does in fact sign over property ownership to another party. In the case of a HECM, a deed in lieu of foreclosure is typically used by the surviving heirs of a HECM borrower who find their parent’s reverse mortgage loan balance exceeds the home’s present value. This instrument signs over the home and property back to the lender avoiding a foreclosure proceeding. The deed in lieu in foreclosure represents the conclusion of the HECM loan and more importantly the importance of the loan’s non-recourse clause, which states that no other assets other than the home can be used to secure the loan. Heirs unfamiliar with this unique transaction could easily be left with the impression that their parents had signed over their home and thus add credibility to the myth.

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Persuading with Questions


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3 Tactics to Overcome Sales Objections with Questions

reverse mortgage newsOne of the earliest lessons I learned in sales was ‘if you say it they will doubt you, but if they say it, it is true.” As reverse mortga ge professionals we practice the art of educating and persuading. When faced with borrowers or family members strongly opposed to a HECM, try one or several of these approaches.

1. The Socratic Method.

The Socratic method seeks to open dialog, stimulate critical thinking and potentially get the other party to abandon their biases and presumptions. Basically, it is answering a question with another question. The borrower may state: “reverse mortgages are too expensive.” You could reply, “what makes them too expensive?” or “could you explain that a bit more for me so I understand?”

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Dealing with Adult Children

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Try this strategy the next time adult children are at the appointment

reverse mortgage newsAdult children. There are many times when they should and can be at their parent’s reverse mortgage appointment. How do you approach such a meeting? When should you arrive? What personality types should you be aware of.

About John Luddy: John has trained reverse mortgage professionals how to be successful when sitting face-to-face at the kitchen table with prospective HECM borrowers. Norcom is looking for qualified loan officer candidates. To learn more call 1-860-507-2582 or email John Luddy here

Fill out my online form.

Phased Retirement — Scaling That Hill With Ease

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Closing the Gap / Part 1

Is there a “generation gap” between today’s seniors and younger people, whether Boomers (many of whom are now seniors), Gen Xers, or Millennials? As we explored in Warfare or Welfare?, the answer in the workplace is “no”: just as kids and grandparents are a natural fit, younger employees enjoy learning from mature mentors, who act as a company’s living archive.

retirement_ageAnd in today’s economy, businesses want to keep elder workers and their decades of accumulated business acumen on the job a little longer. They’ve evolved a way to do so that serves everyone involved. It’s known as phased retirement, which could dovetail nicely with seniors postponing their reverse mortgage application for a few years.

Winding Down with Grace

In phased retirement, someone who is ready to reduce their workload but not quite ready to quit cold turkey lightens their schedule, so they still generate an income, but at a less intense pace than previously. It’s a win for everyone: companies keep the skilled employee as a team member a little longer, the experienced worker is available to mentor younger staff, and the gradual reduction allows him or her to ease into retirement, rather than going from full-time to no time in one fell swoop, which can be very disorienting to people accustomed to defining themselves by their job.

In fact, with 10,000 Boomers turning 65 daily, “businesses are scrambling to find ways to slow an exodus of the most experienced employees and ensure that they pass along their knowledge before they leave,” notes Bloomberg Businessweek. “Fourteen percent of U.S. companies offered either a formal or informal phased retirement program in 2016, up from 10 percent in 2012, according to the Society for Human Resource Management.”

Refining and Redefining Retirement

A recent survey found that among pre-retirees age 50 and up, just over a third (35%) want to continue to work part-time in retirement, often in exciting new careers. Another third envision cycling between work and leisure, five percent wanted to continue working full time, and only 28 percent said they never want to work for pay again — though this doesn’t rule out volunteering, sitting on advisory boards, or similar unpaid opportunities.

Older workers want to stay engaged and keep working, but in new ways, affirms Paul Irving, chairman of the Milken Institute Center for the Future of Aging. And for some businesses, such as skilled trades, retaining these older employees is essential. Steelcase, for example, manufactures more than 5,000 desks, tables, and file cabinets a day. The company has an apprentice program for Millennials, but a shortage of Gen X workers. One manager reports, “We’ve got a big gap in the middle, so we have to keep talented people in their sixties a little longer.”

Clearly, when it comes to the workplace, the generation gap has been reimagined as an inclusive arrangement that works for all. Beyond income, however, one of the greatest reasons for remaining employed later in life is a sense of purpose.

We’ll focus on the role of purpose and connection in seniors’ lives next week, in Closing the Gap/Part 2.

It’s Time to Hedge Against Inflation

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Using a Standby Reverse as an Inflation Hedge

reverse mortgage newsAfter several years of artificially low interest rates the Federal Reserve is beginning to raise interest rates – incrementally albeit. With home values still modestly appreciating across the country and interest rates beginning to rise, is now the window of opportunity for homeowners to hedge against inflation?

The Fed may tighten the money supply as fears of inflation begin to rise. In the wake of the Great Recession, many feared that prices for good would fall. However, that fear may be put to rest and replaced with another – inflation. A recent CNBC article states that a .6% jump in the Consumer Price Index (CPI) in January, pushed the annual inflation rate to a five-year high of 2.5 percent.

Rising prices will put more pressure on older homeowners on a fixed income as the cost of goods and services increase. Rising interest rates will increase the cost of borrowing and also reduce the cash benefit that reverse mortgage borrowers can obtain. In this uncertain economic landscape some homeowners could benefit by leveraging a HECM line of credit as a hedge against inflation, states a recent article in the Wall Street Journal. Older homeowners may want to revisit the ‘wait and see’ approach to getting a reverse mortgage, and rather choose to secure the loan at a younger age.

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I Pledge Allegiance to the Grind


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Dealing with and overcoming the daily grind

reverse mortgage news“I pledge allegiance to the grind, and to the exhaustion for which it stands. One professional, over worked, with burnout and frustration for all.”

A recent blog post entitled “I Pledge Allegiance to the Grind” got me thinking. How many are dissatisfied, not because of what they are doing, but because how they are doing it?

You’ve probably heard about the doctor who is burned out after a decade in practice, who just wants to ‘do their own thing’. Can you blame them? Burnout is a result of ‘the grind’. Here are some ways we can step back, reevaluate and regain some semblance of perspective.

1. Start at the beginning. What got you into reverse mortgage lending? Being a business owner, spouse or partner? Think back and remember the ‘why’ when you first began.

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