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4 Keys to Successfully Implementing the Financial Assessment

reverse mortgage newsI’ve often used the analogy that financial planners should treat their clients as a doctor would treat their patient. Gather the facts, find where it hurts and look to all possible solutions before prescribing a cure. Shouldn’t we do the same?

Until recently reverse mortgage fact-finding typically focused on the homeowner’s age, home value and outstanding mortgage debt prior to recommending a reverse mortgage. While this approach may have solved many problems for past borrowers did we look for potential future pitfalls and conflicts that should have been considered first?

While unwelcome by many the Financial Assessment has forced us to take a long term approach when determining if the Home Equity Conversion Mortgage is sustainable cure.

Here are some keys to success.

1- Set the stage. Before you begin explaining the program, fact-finding or even building rapport let the prospective borrower know what you will be doing. You are assertively telling while asking permission at the same time. For example, “Mr client, today we are going to do a couple of things with your permission. First we will…

Download a transcript of this episode here.

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James E. Veale, CPA, MBT June 1, 2015 at 11:41 am

Let us not kid ourselves. The amount of information gathered in financial assessment is insufficient to conclude much about the long-term financial situation of the client.

Financial assessment trainers are stating that if there is sufficient income and assets to pass financial assets stop and do not keep digging for more. Also we have little to no idea about compensating factors or extenuating circumstances if the prospect passes financial assessment the first time.

When FIT came into existence, Dr. Stucki over relied on general questions with less than sufficient financial data upon which to reach any relevant conclusions. Her view was that health, the living situation of the senior, and other non-financial information are crucial when looking at the future of situation of the senior. She is right that to adequately plan a broad base of information on many different subjects is needed but she was also wrong to relegate financial information to almost no importance. BCU had much of the financial information FIT needed in order to reach a reasonable conclusion about getting a HECM but it was not even linked to FIT and could NOT be inputted into the FIT program. When asked if Dr. Stucki considered the CFP initial client questionnaire or CFP risk tolerance questionnaire in creating FIT, she honestly stated that neither were looked at.

Financial assessment as performed by lenders is designed to take current financial information and determine if it is likely that the borrower will be able to avoid defaults on property charges. While the data can be used for many other things, it is insufficient and incomplete to “take a long term approach” to advising on a HECM.

Let us not be fooled by what we do or what we gather and analyze, we are salespeople who can either act professionally or otherwise. Originating HECMs is not a professional occupation nor should it be. Like financial planners need to learn to work with us, we need to learn to work with them.

We have a strong tendency to replace the judgment of borrowers with our own. We rarely even consider the risk tolerance of the borrower even when we know what the term means because we have made no documented or credible effort to determine what it is in various circumstances.

Here is another area of great concern for anyone who has done a great deal of planning for clients, secrets your client hides from you as presented in seven examples in a recent “Financial Planning” magazine titled: “7 Secrets Your Clients Are Keeping.” You can read it at:


(The opinions expressed in this comment are not necessarily those of RMS or its affiliates.)

Lance Canada June 2, 2015 at 5:23 am

Thanks Shannon for another nice job.

Financial Assessment helps us do a better job with the tools that we have. I like you analogy of the Doctor. We cannot fix a lifetime of bad habits or insufficient planning. Not to mention unforeseen occurrences that befall us all.

We are not Financial Planners. In fact for most of our clients, financial planning should have been started many years before we show up.

By keeping our process simple using 4 steps like you mentioned, we gather the information needed without getting analysis paralysis ourselves, while still being responsible in our job.

Our Clients are in the last third of the race, we are helping them get to the finish line.

We can still do a great service to so many people by keeping it simple.

“The operation was a success, but the patient died.” We can only do the best that we can.

Keep up the good work.

The_Cynic June 2, 2015 at 4:35 pm


Great comment.


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