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Nov 15, 2018

This episode, we welcome special guest John Luddy, SVP of Reverse Mortgage Lending at Norcom Mortgage. With over 30 successful years in the mortgage industry, and 10 in reverse mortgages specifically, John shares insight into reverse mortgage lending techniques and how to make connections with referral partners.

Show Notes

Why do you think traditional forward mortgage lenders hesitate to employ reverse mortgages?

Product knowledge. When you start with a new product that has a lot of different facets, you don’t have the courage to sell. Most loan officers learn reverse mortgages from wholesale account reps, and while they can teach you the complexity of reverse mortgages, they can’t teach you how to sell and overcome objections in real-time situations with the potential borrower and their family members. At

Norcom, we have the staff and support to allow you to learn the product knowledge for reverse mortgages and how to answer questions and solve the problems of your reverse mortgage borrowers.

What is the sales cycle of a reverse mortgage loan?

Much longer than a forward mortgage. You have to be prepared to stay in contact with your client, find ways to make contact, and don’t let them fall off your radar, but also don’t push.

Who are the target referral sources?

Most leads come from different sources than forward lead sources. Reverse mortgage leads frequently come from attorneys because of life situations that reverse mortgage clients face more regularly. Also, it is worth considering rebranding if that will help you to connect with more of your lead sources and stay current with new products and new lead sources. More importantly, don’t chase leads, chase lead sources because that’s how to sustain your business if one area begins to ebb a bit.

What are the biggest, most common misconceptions of loan originators or of clients in the field?

The biggest misconception that seniors have is that they are going to lose the home. The second is cost. Most clients will want to talk about cost first, but if you talk about cost too early, they are low-information borrowers who won’t get past the cost issue to consider the benefits of a reverse mortgage. Delicately find a way to set cost aside and show them the benefits and features of a reverse mortgage which will diminish the concerns with the cost.

What are the most common reasons that a client would need a reverse mortgage?

The most common need is in-house healthcare. A client is getting older and would like to stay in their home but needs around-the-clock healthcare which is expensive. The second reason is taxes. A reverse borrower will have the finances to manage month-to-month, but when tax time comes twice a year, they need more on-hand cash which a reverse mortgage can provide.

If a loan officer wants to add reverse mortgages to their tool belt, what does the option add to their opportunities?

Well, you can definitely do both and use both as a tool to help families. You may find that you become a family’s generational lender, you help a client who is a first-time borrower, but then their aunt or mother is in need of a reverse mortgage. You don’t want to turn people away or be the guy who says, “I don’t have that product.” Maybe partner with someone who’s experienced in your company, and once you get a few under your belt, you’ll be confident to sell reverse as well as you do forward mortgages.

How can loan officers introduce reverse mortgages to their referral partners and take advantage of that for the whole breadth of their business?

Explain to your realtor partner what a reverse borrower might look like. Give them examples of a situation they may see a client in, or what the walk-away objection might be, and help them understand how a reverse mortgage could turn that walk-away client into two commissions.

From a sales perspective and as a sales tactic, are reverse mortgages becoming a more main-stream product?

Yes. With reverse mortgage product knowledge, you become the partner that a realtor will turn to when they realize their client fits the reverse mortgage profile. Then, they may be in touch with you regarding a 203k or other product because you’ve become their go-to for product knowledge.