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C.J. was about to lose her home to foreclosure. After a reverse mortgage saved her home and gave her $20,000 cash, she referred her four children to the program. She also requested that her originator speak to 20 of her friends at her senior-recreation center.
A life-insurance agent referred B.K. to a reverse program. With the proceeds of a reverse mortgage, he bought single-premium life insurance to enhance his estate. The agent refers at least two new prospects a month.
C.B. had a $150,000 home with no debt. His bank talked him into a home-equity loan to buy a car and fund his grandson’s college education. He reluctantly agreed, but the payments — at 8.5 percent — were too much to handle. After counseling, he got a reverse mortgage that allowed him to pay off the home-equity loan and achieve the same financial goals with no payments.
D.F. was having a tough time making payments on a $195,000 mortgage at 8 percent. Unfortunately, the payoff on the current loan was more than a reverse mortgage’s maximum amount. But a refinance into an option ARM made sense in order to reduce her monthly cash outlay. She agreed to look into reverse mortgage in a few years.
Entering the market
The senior market is key to reverse-mortgage success. To achieve results within the market, mortgage professionals must be willing to understand its qualities and adjust their thinking, planning and marketing.
Specializing in reverse mortgages can pay off in the long run, though it also is wise to consider the barriers upon entering this market. To offer reverse mortgages, the mortgage company must be FHA-approved or be an affiliated branch of an FHA-approved lender or correspondent. A lender or correspondent also must be able to originate reverse mortgages or be a wholesale correspondent of one of the reverse-mortgage lenders. More than 90 percent of U.S. reverse mortgages are FHA-HECM, so the real opportunities are in that market.
Originators also must keep in mind that they should be kind, patient, caring, compassionate and empathetic with the senior market. They also should recognize that there will be plenty more prospects as baby boomers hit retirement age in the next few years.
Those who are interested in helping seniors stay in their homes while earning a nice living should look at adding reverse mortgages to their offerings.
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