Nov/Dec 2021 RMM

Working With Technical Terms When explaining how reverse mortgages work, the experts suggest loan officers keep explanations simple. Borrowers are not impressed by industry jargon, Haviland says. “We simply are making things too complex,” Haviland explains. Loan officers should think about the times when they are talking with an expert who uses unfamiliar terms. “You’re uncertain. You pull back. You’re not sure about this. That is how your borrower feels.” Practice the three C’s: clear, concise and compliant, Haviland says, adding a fourth “confident.” “Take your time. Pause to make sure the borrower is following you. And ask the follow-up questions,” Haviland says. She further suggests that loan originators practice their explanations on people who are not in the reverse mortgage industry and ask them if it makes sense. Cripple says consumers need to understand key concepts so they must be explained clearly and plainly. “Most of them are hearing the concepts for the first time,” she says. That is true during every step of the process, the experts say. For example, borrowers need to know their responsibilities for occupying a property as a primary residence and when it might be okay to go on an extended cruise. They need a clear understanding of how minimum property standards are required before closing but how those responsibilities extend afterward. Borrowers also must know their responsibilities for paying all property charges, from the obvious property taxes and hazard insurance but also if there are other costs, such as flood insurance or HOA fees, Cripple says. Then there are the discussions about loan options and events that trigger when a loan is due, such as the so-called nursing home clause if a borrower must leave the home. The trick is to find the right bal- ance between adequate explanations and compliance with HECM rules, says Dan Hultquist, CRMP, national reverse sales training specialist for Fairway Independent Mortgage, Canton, GA. Loan officers sometimes oversimplify points and aren’t compliant. Other times, they give overly detailed explanations that are compliant but confuse the consumer. “What we need to do is find a happy medium,” Hultquist says. For example, while the financial assessment guide released in 2015 has more than 80 pages, borrowers don’t need to know the technical jargon and details. And when discussing pertinent issues, such as a Life Expectancy Set- Aside (LESA), the best practice is to do so in a way that doesn’t sound punitive, so avoid telling someone they failed the assessment. Instead, he says, his conversation is along these lines: “We need to examine your credit history, property charge history and residual income to make sure we are providing a sustainable solution for you and your family. To ensure sustainability, we sometimes need to set- aside a portion of your principal limit so that we can pay critical property charges on your behalf.” When it comes to mandatory disclosures, he suggests loan officers shouldn’t dread them but embrace them and use them as opportunities to best inform borrowers. The Total Annual Loan Cost (TALC) and other charts can plainly outline details. Experience has him anticipating questions, such as why there are two deeds. The simpler that is explained, the better, he says. “The first deed secures the lender’s position, while HUD has the second,” Hultquist tells clients. “This ensures that you will continue to receive loan payments if the lender becomes incapable. When the loan is paid off, both security instruments will be released from county records.” Hultquist says loan officers need to address any questions that might arise but should avoid introducing issues that the customers haven’t raised. For example, don’t reassure people that reverse mortgages are not a scam because they might not have been thinking along those lines. “There’s no reason to scare a borrower,” he says. Some loan officers will make sales even if they aren’t prepared, Haviland says. But learning to actively listen, clearly answering clients’ questions and having conversations can only help. Afterall, Haviland says, “You want to maximize sales.” Nuance continued from page 27 Dan Hultquist 28 REVERSE MORTGAGE / NOVEMBER-DECEMBER 2021