HECM for Purchase has been grounded. Reverse mortgage pros are trying to give it wings

Home Equity Conversion Mortgages (HECMs) have long been the gold standard product set for reverse mortgage originators, but they became a minority share of the market earlier this year as Data from the U.S. Department of Housing and Urban Development (Given that older Americans are When you’re in We have a lot of seniors who are in large homes and need to Patrick Ortiz, regional vice president for the Reverse One division, CrossCountry Mortgage: When I talk to forward loan officers, I break down the basics and demystify what it is. It’s not some exotic program. It’s an FHA-backed loan or a regulated proprietary loan.

I don’t really like to use the term PLF (principal limit factor), because they don’t know what that is. I talk about LTV (loan-to-value) and DTI (debt-to-income) ratios. The more we educate our forward loan officers on what we can do, the less complicated they think it is. Every LO should be able to have a five- to seven-minute conversation with a borrower about the basics of reverse. The way we’re going to springboard the whole program is to That piece of education is missing. That’s where a lot of lenders get in their own head about pitching products. You’re not losing the deal by talking to them about reverse. You’re opening up additional options that they didn’t know they have.

Can you share an example where HECM for Purchase changed the equation and allowed a client to buy something new? What was the human impact of the deal on the client’s retirement?

Dan Mudd, producing regional manager for reverse, Rate: My favorite HECM for Purchase story involves a client I worked with about 10 years ago. Their mom and dad were getting older, so the kids reached out to me again at the end of last year and asked, “What are the options to help them do a lateral move?”

We were able to work with a local Realtor and sell their two-story, split-level property. We took their equity and put them into a one-story condominium, allowing them to age in place with no money out of their pocket. They were within five minutes of their grandkids, instead of being an hour away. That, to me, was the best situation, because the kids already believed in the product and understood it, and they knew it was the best option for their parents.

Rael-Albin: I had a widow who’d lost her husband. They were both on You really need to look at it by advising them on how they can have a better life and not be stressed out. They shouldn’t be stressed at 80 years old on whether or not they can eat that month.

Let’s talk about how to structure a successful and durable referral partnership between real estate agents and loan officers. What communication protocols would you use to ensure a smooth process for these types of transactions?

Ortiz: What I tell people is, this isn’t for every one of your buyers. It’s not for every client that’s going to walk through the door at an open house. But it is for some of them. And if you don’t know the program, you’re not offering it and you’re not even having a conversation about it, I promise you, clients are going to have a conversation about it with somebody else.

You need to play to this enormous, over-62 demographic that has all the I had the privilege of working with some clients not too long ago who were selling their quad-level home in Arvada, Colorado, and moving to a 55-plus community in Broomfield. Based on what they were going to net from the sale of the house in Arvada, they were really going to have to limit what they could purchase in the new-home community.

Fortunately, they heard about HECM for Purchase. We got together and I showed them how friends don’t let friends pay cash for their house. We showed them they could actually afford some of those beautiful features that they longed to have. One of the options that the builder offered was this indoor-outdoor fireplace that would serve both the living room and back deck, and that was one of those features that they dreamed of having.