The Power of Scent in Sales

Shannon Hicks August 10, 2017 4


Why the familiar scent of Old Spice or Perfume may work wonders…

This week John Luddy discusses the power of scent and how you can leverage the psychological power of scent, something we often overlook…
About John Luddy: John has trained reverse mortgage professionals how to be successful when sitting face-to-face at the kitchen table with prospective HECM borrowers. Norcom is looking for qualified loan officer candidates. To learn more call 1-860-507-2582 or email John Luddy here

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  1. Owen Coyle February 9, 2017 at 7:42 am - Reply

    I really enjoy John Luddy’s sales tip each week.
    Last week I called John to ask him how he answers when someone tells him “the fees on a reverse mortgage are extremely high”.

    I talked with John for about 20 minutes and he gave me some excellent information that I will be able to use the next time someone tells me that “the fees are extremely high”.

    He told me he would be talking about “Old Spice” for his next sales tip, which he did this morning.

    I hope he keeps giving us his weekly sales tips for many years to come.

    Owen Coyle

  2. James E. Veale, CPA, MBT August 10, 2017 at 11:33 am - Reply

    Mr. Coyle (and I guess Mr. Luddy),

    “…the fees on a reverse mortgage are extremely high” is without question true and here is why.

    First there is no adjective as to what type of fees are being addressed nor are HECMs excluded from the phrase “reverse mortgage.”

    I know HECM originators love to make arguments to overcome objections about upfront fees but let us say the lender does not pass through the cost of upfront MIP and charges nothing as an origination fee. Does that make a HECM free of all extremely high fees?

    Let us say that HECM with NO upfront MIP and no origination fee has an outstanding balance of $100,000 at the start of the HECM and the borrower neither takes any more out of the HECM nor makes any mortgage payments for 20 years. Let us assume that the adjustable note interest rate had an average effective rate of 5%. Is there still an extremely high fee cost associated with that HECM?

    That answer is absolutely YES. Why? Ongoing MIP is almost $50,000 (actually $49,581) and the total interest is $198,323 for a total balance due after 20 years of $347,904 (including $100,000 of principal).

    So do you call a $50,000 fee to have $100,000 for JUST 20 years with an additional $198,000 due in interest CHEAP or about the same as some other type of home mortgage? Very, very doubtful as to both. Ongoing MIP is an extremely high cost for a HECM.

    The problem is neither applicants nor borrowers ever see what the TOTAL estimated ONGOING MIP is on the amortization schedule or any schedule for that matter. Some HECM originators would come back with the response that the person getting the amortization schedule could add it up or they would be happy to do but why hasn’t the originator done that already?

    Back in 2004, no HECM originator I talked with (and I talked with a couple of dozen originators trying to find one that really knew the product) regarding the senior I was representing could answer my rather superficial questions like the one you discussed with Mr. Luddy. They could not even tell me if my client decided in year 12 to take $90,000 out of her line of credit in the form of tenure payouts, how much she would get and what her line of credit would look like in year 24. Instead what I heard were canned answers to overcome my objections when I had no objections. It was if the initials CPA were like a red flag in front of a bull.

    You should have seen the responses I got to my questions about ongoing MIP if the interest was assumed to be 4.3% rather than 5.6%. Most originators did not realize ongoing MIP is SENSITIVE to the interest rate even though half I talked with claimed to have done hundreds of closings and many more applications and in each every case gone over the amortization schedule CAREFULLY with the borrower.

    While there are a few who understand HECMs, most originators are novices when it comes to any variation from the schedules they are presenting even after years of originating them. Why?

    Yet you have to remember I liked this product so much that for 12 years, I originated it. I have a NMLS license. But this is not about me but rather about how shallow the knowledge of this product is even in the hands of those who meet with financial advisers. Oh, by the way, I advised my client to get a HECM, which she did.

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