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The Road Ahead: Preparing for 2014

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Now that the dust has settled, we can prepare
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Reverse Mortgage Business Blog

Now is the time for us to examine several facets of our reverse mortgage business from product knowledge, marketing, sales tracking and emerging markets. Product knowledge is the foundation upon which we build our communication, persuasion and public image. I recall just two short years ago overhearing several originators incorrectly describing how the line of credit growth worked. I was an unsellting revelation. Our industry’s collective image depends upon an educated and informed sales force who know the nuances of the HECM product. 50% rule? 60% distribution limits, financial assessment. Before we approach prospective borrowers it behooves us to know every facet of the new HECM. The product is not as simple as one would be led to believe.

Due to the lower principal limits and first year distribution limits we must reexamine our marketing strategy. Have we adjusted our loan to value ratio with our lead vendors? Are we marketing to senior homeowners who are not strictly house rich and cash poor? Successful marketing requires a multi-pronged approach. In other words, several sources of new leads: internet, referrals from borrowers, professional referrals and public engagements to name a few. Plans built on one medium alone are especially vulnerable to failure if that strategy wanes in effectiveness or crashes.

 

 

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  1. One of the worst industry slogans is that we educate. What it boils down to is correct or incorrect, right or wrong, originators believe that, however, they understand HECMs is how the HECM works.

    Like teachers in the public school system that knowledge needs testing. Unlike teachers in the public school system, there was no standard textbook at the the college level from which education was provided to originators with lectures and testing. Thus if you have a NMLS license or registration you are a fully qualified originator.

    Yes, some lenders have tried to do a better job at it than others but even the best educators in the country (per some) can not articulate some very basic concepts such as the potential growth in the line of credit or servicing fee set aside. How will they deal with LESA (Life Expectancy Set Aside)?

    In the last few months I have heard and read explanations on what constituted a principal residence. Some say that as along as mail, voter registration, tax returns, driver’s licenses, homeowner/homestead exemptions, and other major indications of principal residence are on or indicate the collateral for the HECM as the place of principal residence, then the most a homeowner must actually occupy the collateral is one day out of the year. Then there are those who also believe the same indications of principal residence must be in place but then say that a principal residence is the HECM borrower lives for more than six months of each calendar year. So who is right? Both are giving very different pictures of what principal residence means after HECM initial funding.

    HUD needs to step in and provide uniform standards of HECM education for originators.


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