July-Aug 2020

Upper Midwest continued on page 30 since. Last year was a low point across the board. This year, though, started off relatively well, especially as interest rates fell, making HECMs more attractive. “That’s where we have been trying to educate our bor- rowers,” says Ken Krajewski, head of reverse mortgage lending for 1st Nations Reverse Mortgage, based in Southfield, MI, near Detroit. The company spent the early part of 2020 reaching out to customers who might have looked at a reverse mortgage in 2019 but did not move forward, Krajewski says. After COVID-19 hit, the company began contacting financial planners to remind them about the HECM option, building on its earlier work to lay a foundation. “The mission hasn’t changed as far as educating our community about the benefits that this can have for older people,” says Krajewski. Alan Tenney, a HECM specialist with Mutual of Omaha Mortgage in Cedar Falls, IA, typically finds about half of his leads through financial planners. The pandemic made it harder to network, but it has not diminished interest in the product. “I’m getting a few clients that are calling me directly because their advisers told them to and forwarded my information to them,” Tenney says. Tenney also has been cultivating another referral source: a builder whose emphasis is homes for people who are 55 and over. Financial advisers, meanwhile, have recommended the product to clients who are downsizing. The referrals have led to other sources and ultimately helped Tenney build the HECM for Purchase into about 25 to 30 percent of his overall business. The typical borrower is taking out between $350,000 and $450,000, he adds. Tenney says he and his clients have adjusted to social distancing guidelines that prevent them from meeting. And he still expects a good second half of the year in terms of lending activity. Nonetheless, he misses the personal touch. “That’s one of my selling points with this product,” Tenney says. Borrowers understand that he hasn’t been able to meet in person, especially given the risk to older people, he adds. But he worries about what is lost when he can’t shake hands and sit across the table from a client. Social distancing has also been an adjustment for Jeff Flanery, CRMP, a reverse mortgage adviser for Cambria Mortgage in Eden Prairie, MN, a sub- urb of Minneapolis. “I was very much a hands-on, go-and-meet-with-the-clients kind of lender,” Flanery says. The year started off business-as-usual, explains Flanery, who does about 25 to 30 HECMs in a typical year. But by the end of March, his state was in a virtual lockdown to stem the spread of COVID-19. HECM applications started jumping. With face-to-face meetings out of the question, Flanery turned to the phone, the mail and the video-conferencing app Zoom. He also has dropped off application packages on borrowers’ doorsteps. One potentially complicating factor was a change that allowed external-only appraisals. The goal was to mitigate the risk of infection by distancing apprais- ers and homeowners. But it could lead to inaccurate appraisals, Flanery notes. It’s not just the process that has changed—so have the borrowers. Before the pandemic, Flanery says, his aver- age loan size was about $300,000. This year, it has risen to $494,000, an increase that Flanery attributes to borrowers worried about their retirement savings. Many do not have mortgages they want to pay off; they are just looking to supplement their income after the wild swings in the stock market this spring. “I think more and more people are going to look at a reverse mortgage as another option for accessing cash,” he says, adding that he also has been hearing more often from financial planners. Planners, of course, have heard a lot about reverse mortgages as the industry worked over the last few years to overcome the stereotypes of the past. Those efforts are bearing fruit for Shane Lester, a CRMP with Reverse Mortgages of Arkansas, in Little Rock, AR. “A lot of the preconceived notions are not as much of a roadblock as they were,” says Lester, who was Alan Tenney Jeff Flanery Shane Lester Ken Krajewski REVERSE MORTGAGE / JULY-AUGUST 2020 29