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hello welcome to the loan officer sales training with the mortgage calculator today we're going to be talking about prospecting for reverse mortgages go ahead and drop a comment there in the chat as you tune in I got the chat pulled up on the screen for now just need to wait a second here to go live on all the different platforms remember we do stream these on YouTube Facebook Instagram LinkedIn Tik Tok and all the different platforms so give us a minute here to get up and running but I appreciate everybody tuning in early all right it looks like we are live on all the different platforms so we'll go ahead and get started I'm going to take the chat off the screen for now but keep dropping comments there in the chat you can drop any questions for me that you have in the chat as well as we go through here today so welcome everyone my name is Kyle Hershey I am the COO of the mortgage calculator and this is our loan officer sales training that we do at 12:00 p.m. Eastern time every weekday where we go through more of the front end and the sales and of the mortgage business now today we're going to be talking about something very specific which is prospecting for reverse mortgages right so very specific product only available for a very specific demographic but it's definitely something that we should all know about as loan officers that we should all know how to approach getting business this is one of those products that a lot of people specialize in um more so than probably any other product it's something that people that that that do them know how to do them typically specialize in doing them and do a lot of them right because it's a very specific type of loan it's very different to do and to originate than all other loan types and so a lot of the times the people that that you know grasp it that do it that have clientele for it they typically kind of go all the way with it and specialize in it that doesn't mean you need to specialize in it to do it but it's definitely one of those loans that is a niche for a lot of people and they uh want to specialize in it especially because uh the compensation used to be ridiculously high right and it's still high compensation but uh obviously a lot of people liked to specialize in it simply because the compensation was so high right so it sounds like a great thing to specialize in so uh anyhow let's go ahead and get into it here I am going to switch my screen all right okay so first let's go ahead and talk about what is a reverse mortgage now for reverse mortgages one of the borrowers must be at least 62 years of age now that doesn't mean both of them have to be 62 one of them could be younger but the benefits that they'll qualify for would be based on the younger person as opposed to the older person because the age is going to make a difference in the LTV they can have and you know I won't get into all this super specific stuff but the point here is that at least one borrower must be 62 and keep this in mind for a reverse mortgage this is probably one of the biggest misconceptions about a reverse mortgage a reverse mortgage does not eliminate a mortgage payment it eliminates the obligation to make the mortgage payment right you can still make the mortgage payment just like normal right and it'll be a regular amortising loan but when you don't make the payment it's negative amortization right one of the the the things that you know is our responsibility to know and to educate people about is that because there's no obligation to make a mortgage payment but there is an obligation to keep up with their taxes and insurance right but they do not need to pay a principal or interest on their mortgage payment a lot of people don't realize that you could still make your payments like normal so for example this is something where you could do this as kind of a justtin case thing right you can have it in place keep making your payments like normal so that it's not negatively advertising and then if the need arises there's a medical issue or there's uh you know a passing of a family member whatever it is where money is needed then they can just skip their mortgage payment whenever they want right they could make it whenever they want they can skip it whenever they want they don't have to you know like rearrange uh rearr arrangements with their lender or their service or anything it's just they can make it if they want they cannot make it if they want right and so just remember that reverse mortgage does not mean they don't make a mortgage payment it means they have no obligation to make a mortgage payment they still can and they also still must pay their taxes and insurance right um that's one of the biggest uh things that people got caught up with back when reverse mortgages were getting a bad WP uh back when you know people were getting foreclosed on because irresponsible loan officers were loaning out reverse mortgages for these commissions without fully explaining to the borrowers what's going on and this is one of the big things that they didn't explained was the no ta the taxes and insurance people think they they have no payment at all whatsoever well that's not true they still have to pay their taxes and insurance so that needs to be planned and budgeted and know that that's what's going on because that's the only way the bank could ever take your home the only way that you will uh get your you know uh reverse mortgage called due or uh you know repossessed or whatever you want to say it is if the taxes and insurance are paid as long as you are alive and it's your primary residence right and you pay your taxes and insurance you never have an obligation to make a mortgage payment you could live to be 180 years old the house could be way underwater in terms of equity and value it does not matter as long as you're living in the home as your primary residence and making your taxes and insurance payments you can never be kicked out of the home ever the so a lot of people think oh this is a you know this has a bad rap some people say it's a scam or whatever you'll get your house taken away there's only one way to get your house taken away which is not to pay your taxes and insurance or to not have it as your primary residence and then your loan's going to be called due right obviously those only two ways anything would ever happen and it literally specifically states in the law that as long as they make their taxes and insurance payments and it's their primary residence they can never be kicked out it can never be taken away now I don't want to get too far into it but also just so you know the house can be totally under water because of the negative amortization over the years and that's totally fine and let's say the person that owns the home passes away well their family has the opportunity to purchase the property at 95% of the market value or refinance it at that point so even once the person passes even if the house is underwater this is not something that's like they owe money they're in debt nothing like that so a lot of people have those type of misconceptions about this even if the house is underwater and the person passes away the family members or the estate can either just refinance out of that loan uh you know or they can buy the property back from them for 95% of the market value so um you know a lot of things about this program people don't know uh and I'm not an expert on it so you can look up all kinds of other facts about this too uh typically you're going to need a lot of equity right like 50% 60% % Equity uh it depends on you know what uh again the ages determine the LTV you can get and all that kind of stuff and as I mentioned earlier it's for primary residents uh only now the point of a reverse mortgage is again to to eliminate the obligation to make the mortgage payment now when is this practical so the next slide we're going to talk about how we can Prospect uh for them but what is it that this is accomplishing for people right why would they want to do it when you start prospecting to people what are you prospecting right well this is most commonly used to have a better retirement age uh or I guess um maybe not retirement age is the best but you know better golden years I guess you would say whatever you want to call them um because at the end of the day you know people are typically not getting by just on Social Security and it's a big obligation to make their mortgage payment every month and a lot of people may not have that income or maybe they want more money in their pocket to go do things or to you know spend time with their family take them on vacations or whatever it may be so with the reverse mortgage you can tap into the equity of your home and not only get cash in your pocket to live survive on or go do extra things that you want to do in those years um it also eliminates the obligation to make the mortgage payment so if times get tough you don't make it or if you just want to would rather spend your mortgage payment on your grandkids then you can spend your mortgage payment on your grandkids right and so it's it's it's something that can open up a lot of freedom for people at that age right so there's a a lot of different reasons why somebody would do it uh but at the end of the day it's definitely something uh you know that needs to be explained and you know there's pros and cons which is what we're going to talk about in the uh next slide but you know something that's really important to think about and to talk with people about is that people are living a lot longer nowadays right so 62 used to be like oh you got to be at least 62 how much longer are you gonna be around right well that's young nowadays right people are still in the middle of living their life and healthy and vibrant and mobile at 62 right and so this is something that is uh you know even more I guess I would say effective as time goes on and as people live longer the benefit to the client to the borrower is living longer right the longer that they live the better deal they're getting out of the the situation right and so that's why the LTV is based on age right the younger you are the less money they're going to give you the older you are and the closer you are to passing away the more money that they will give you right so um it's you know things are changing with the the LIF span life expectancy uh as it grows this will just only get a little bit uh you know different of a program and have kind of different uh selling points but at the end of the day it's something that could be put in place for safety for if unexpected medical expenses come up or they're not able to work a a different job or they don't want to have to get you know a job after retirement to supplement their social security income um or what about like covid right maybe they were doing something on the side and then covid happens they can't go out and do uh you know Uber Eats or something like that necessarily right so people were kind of stuck so again who knows maybe a worldwide pandemic but the point is that it's in place to where they don't have to make their payment you know so it's it's it's for that but it's also for money in people's pockets it's for freedom and it's again for you know the opportunity to either be finan more financially stable in those years or uh you know be able to live more and and do more and give more and and all that kind of stuff you know one of the things with this is that a lot of people you know are really set on trying to leave a you know their house to their children they still can right this doesn't stop them from leaving their home to their children necessarily but also at the same time a lot of adults especially nowadays it's not as important to leave that house behind to your children even though you still can a lot of people it may work better for them nowaday days to use the equity in that home use that home for them to live a better life at the end of their life right so things are kind of changing in that direction a little bit okay let's talk about how to prospect for reverse mortgages so our number one thing when we're when we're prospecting for reverse mortgages and we're talking to people this is huge I know we talk about uh you know being educated on programs and talking to borrowers with other programs but this is extremely important here with this right we have to educate the borrower on all the details again you're going to have to first of all you're gonna have to get past the stigma there's a huge stigma with reverse mortgages you only can get past that if you're if you educate the borrower on the details just going over what I went over most people don't know those things but I am nowhere near an expert on a reverse mortgage right there's all kinds other benefits and probably also some other cons to it right um and so it's it's um it's very important that we educate them on all the details now notice here I put to include their family or decision makers this is the key here to actually closing on a reverse mortgage being able to include their decision makers the people they're going to talk to remember that they're going to be speaking to their partner or their children or their grandchildren or uh you know whoever it is that they would take advice Financial advice real estate advice whatever it is right they're not going to be the only one making the decision especially to a person they may not even know in person or whatever so it's always great to bring them in because what's going to happen is your borrower is going to talk to these people about it these people are not going to be educated on the pros and cons they're going to go with the stigma of it being some kind of con or scam to get your home from you I mean you know this the rumors are are more powerful than reality right and so you're going to have to get past that so the easiest way to do that is to not only educate your borrower but educate who they are going to talk to about it and make sure right we just want to make sure that they know what's going on how they could benefit from it and the potential downfalls but we have to educate them on it it's an amazing program for a lot of people it's nothing to be scared of it's just something that you need to know what you're getting into so educating your borrowers first and foremost most important and then you want to include their family or their decision makers ask if you can get on a call with them and you because again you also it's not so that you can sell their family members you just want to give the transaction a fair shot making sure that they know that you know the the pros and cons of it as well and so you're you're you're reaching out to help you're not reaching out to try to sell their family member like oh I sold your your uh parent on this mortgage now I'm gonna sell you on it right we we have to just include them in the process if they have family members decision makers they're going to be talking to we should ask if we can maybe get on a three-way call with them so we can explain everything to them so that they can help you make an educated decision right super super important can't stress that enough number one thing from this training to takeaway is that a reverse mortgage not only do you need to educate yourself on it but the only way to go out there and do reverse mortgages is to educate your borrowers because the biggest thing is the misconception and you know the the fact that people just don't know now we now when we're talking about actually getting out there and prospecting here you should educate your spear on these reverse mortgages once you learn more about them if you don't already you should educate your sphere on it right I mean when I got into mortgages and I learned about reverse mortgages I talked to both of my grandparents about it uh talked about the pros and the cons right and discussed if it would be right for them uh since then I've discussed it with a few other uh family members in that age group as well um not so much random people for me it's been mostly family but I'm not I don't even originate loads right so it's not something I'm trying to push a bunch but my point is I explain to all of them because like for example at my family reunion there was a whole bunch of uh my family there that could benefit from this but they had no idea how it actually works and some of them were like Oh I thought that was a scam but once they learned actually how it works some of them were like oh wow that's really interesting I might want to maybe I should do that and and you know uh uh live a little better in my retirement right so you should educate your sphere on the pros and cons anybody that is in your life that's of that age and again you're not trying to sell them on it you're not trying to push it to them but they should know that this exists and not only should they know that this exists for now but they should know that these exist for the future because they may be in a spot and say you know what times are kind of tight maybe we should take advantage of that reverse mortgage that Kyle was talking to us about let me go ahead and and reach out to him right so educate everybody you know that's of the age just tell them I want to make sure you know that this is here it's a tool for you um and and it works well for a lot of people and some people it won't work for they don't want to do it and that's totally fine uh the people that we can talk to about this right so as far as partners that we can uh you know try to get involved in this and and and see if we can educate some of their clients on it CPAs financial advisors tax preparers uh these are people that are discussing people's retirement plans right and this is a big part of your retirement plan are you going to have a mortgage payment or not are you going to pull cash out of your home and then not have a mortgage payment right this is a huge part of that like everything they've discussed with their financial adviser and tax repairer is going to be based on their budget of them paying their mortgage payment right and how much cash they have in the bank well if we do a reverse mortgage they have a bunch more cash in the bank and they don't have to make a mortgage payment now we can kind of rearrange our entire life in our entire retirement plans and so uh it's very important to reach out to anybody that you know that's a CPA or financial advisor or tax preparer to let them know that you can offer this service you may need to educate them on the pros and cons of it right and so uh definitely the that's the Target right there right the the that's the target Partners those are the people talking to your clients at the exact point that they need to plan of getting a reverse mortgage right and so that that that's the money right there uh now targeted cold call lists in uh our auto dialer at the mortgage calculator we actually do have some targeted cold call lists uh of people that are of that age and own a home right so that is a list it's a good list right it's cold calls but we know they're that age and we know they own a home uh and so although it's a cold call it's a very targeted cold call so that's another way that you can Prospect for this that's also a good way you know to kind of practice right cold calls you can kind of burn through them and not worry if you know you kind of fumbled on one or something right so uh educate yourself on it and then you know maybe cold calls is a good way to start getting into the groove of of talking to people and stuff like that but understand especially like with a cold call right they're going to turn from a cold call to they're going to be talking to friends and family about it they don't know you right especially if you were a cold call so that's going to come back around to this on an even more important note to uh you know want to speak to everybody involved that would be making decisions and make sure they know you and maybe even get on a zoom to see you face to face or something right uh and so you know that's going to be important especially when you're doing cold calls but there's some great targeted lists in there again they're cold calls but they're very targeted so that you know that you know everybody you're calling is essentially a potential client you just need to educate them on the loan so uh also in addition to you educating them on it keep in mind that once the loan is started they before they can close they have to do a a counseling session with a HUD counselor that explains to them the pros and cons of doing this loan and honestly usually it's more about the cons right this is a consumer protection and so they're not going to be ranting on about the benefits that you're telling your client about they're going to be ranting on about the potential downfalls because that's their whole point of of having a consultation with them is to make sure they understand the possible Pitfall so it's your responsibility to prepare the client for that call to prepare anybody else that's in the decisionmaking position about that call and make sure that you understand you're not telling them that something's wrong with it you're just let them know hey you know they're going to be letting you know about some of the potential issues we've already gone over all them they're probably not going to talk about the advantages but we did so just keep that in mind right so um it's kind of something you want to control or else you might have people end up uh backing out after they've spoken to the HUD counsel and again not because anything that you've done or that you're trying to get them to do anything they shouldn't do just you know again it's consumer protection they're mostly going to be looking to uh you know give them more of the negative downfalls and it can kind of create a negative uh attitude and negative Direction going there but that is a hurdle you have to jump through once you're actually doing a loan before it closes they do have to do that counseling session uh and I believe they can do them by phone now as well if I'm not mistaken all right so number one key here the theme of today is education for reverse mortgages right is is um educate yourself and educate your borrowers and educate any family members friends or decision makers that they have that are going to be invol you know influencing them or their decisions right so that's the name of the game in the reverse mortgages is just education some people it works for some people it doesn't we'll never know until we educate them on the pros and cons that's that's as simple as it gets right it's a great fit for some it's not a fit for others the only way we can find that out is if we educate them on exactly what it is so they can decide if it's their one of the people that's perfect for or one of the people that it doesn't make sense for uh let's see here looks like we have a question can the taxes Insurance still be escrow yes they can uh escrow the taxes and insurance I believe that they have to again I'm not a reverse mortgage expert but I think they have to uh still escrow let's see can one buy house after 65 yeah also there's also a um the typical reverse mortgage the one that's typically out there that is done mostly is going to be a heckum h cm is going to be a FHA heckum loan which is going to be a uh you know refinance right a reverse mortgage refinance there's actually an option to per purchase with a reverse mortgage there is such thing as a reverse mortgage purchase I think it's something like only 5% of transactions or something are reverse mortgage purchases for the most part they're usually FHA heckum refinances for reverse mortgage there are companies that have proprietary products so they're not always in FHA heckum but um typically that's usually what what we're talking about here all right I don't see any other questions we can go ahead and wrap it up looks like we are about right on time remember we do this at 12:00 p.m eastern time every weekday where we go through the front end of the mortgage business now I do see we got a last minute question coming in here let's go ahead and pull it up if someone gets a reverse mortgage this is affect them potentially becoming a co-borrower in the future well it's the same as a a regular mortgage right so they're going to treat it like any other mortgage as far as like if they uh you know they still have a balance that they owe on that mortgage right so um I you know it's going to still affect them in whatever way that a regular mortgage will as far as that goes all right all right let's go ahead and wrap it up then uh appreciate everybody tuning in got some new topics this week uh some more topics on how to prospect for different types of loans tomorrow we're going to be talking about how to prospect for second mortgages so appreciate everybody tuning in thank you for the questions and we'll see you all tomorrow 12:00 p.m. Eastern for the next episode of the loone officer sales