Jan/Feb 2023 RMM

The potential borrowers are out there, according to Chris Mayer, CEO of Longbridge Financial, citing research he has done on mortgage applications. Many older homeowners are turned away from home equity lines of credit (HELOCs) but could have qualified for HECMs. Many seniors never apply for any kind of mortgage in the first place, he adds. “There’s a huge market,” he says. “We just have to do a better job of figuring out how to reach them and what the value proposition is. Our problem is not the size of the market—the problem is how do we get there.” Lowering Costs, Reducing Stigma Among the chief complaints about HECMs is their relatively high upfront cost. It often turns borrowers away, including higher-income borrowers who see the reverse mortgage as a discretionary product. They often borrow less than 60 percent of the principal limit. “Government programs work because high-quality borrowers help subsidize people who are needs-based borrowers,” says Mayer. “So, bringing some of those borrowers back will actually help.” The reverse industry also stands to benefit by demonstrating the value of HECMs to a new clientele, he adds. “They’re clients who can use reverse mortgages to help themselves and provide insurance against bad outcomes.” While the government has a role to play in lowering upfront costs, lenders aren’t helpless. Robinson says AAG has been exploring ways to present the costs to borrowers to provide them a better context of their entire financial picture when considering a reverse mortgage. AAG also has been focusing on its messages for the adult children of potential reverse borrowers. “If you don’t have the adult children along for the ride, you’re probably looking at a recipe for disaster somewhere in the future, whether it’s at the origination table or sometime during servicing or at a claim,” he says. “Why not go ahead and preempt that and have them become an ally?” People also can talk about the program in ways that continue to lessen the lingering stigma attached to reverse mortgages, Mayer says. Government officials still tend to describe a HECM as an option of last resort for homeowners rather than an effective tool for retirement planning. “That would probably be the No. 1 thing that I would like, just to talk about the program as a really viable way for people to use their home equity and maybe not even feel like you have to use the word ‘responsibly’ every time and just say it’s a ‘viable’ way of doing it, with responsibly being implied,” he says. In addition, lenders can help the government see the value of the HECM program in complementing other goals, says Mike Kent, president of Liberty Reverse Mortgage. The Biden administration, for example, has been looking for ways to encourage energy efficiency and reduce carbon emissions. A HECM could be used to help seniors pay for new windows, better insulation and even rooftop solar panels, Kent says. The product can also help seniors age in place, another priority for policymakers. “We have to be far more vocal about the social aspect of this program and the good it does,” Kent says. “And we can align with other policies so we get away from just the conversation about the economics because that’s a tougher and more complex conversation.” Working on Referrals Over the past few years, reverse mortgage lenders have made headway in helping financial planners, wealth advisers, accountants and other professionals see the value of a reverse mortgage. Lenders should continue to focus on those referral sources as they navigate the current market. Among reverse lenders who have established strong networks over the years, sources are referring borrowers more often than ever before, observers say. What’s Ahead continued on page 26 Chris Mayer Mike Kent “We have to be far more vocal about the social aspect of this program and the good it does.” —Mike Kent, President of Liberty Reverse Mortgage REVERSE MORTGAGE / JANUARY–FEBRUARY 2023 25

RkJQdWJsaXNoZXIy MjQ1MzY1