Reverse Mortgage Originator: Real Estate CE Helps Close More Purchase Loans
When Curtis Mangus of Premier Mortgage Resources in Meridian, Idaho considered pivoting to reverse after working decades in the traditional mortgage industry, he asked his managing partner at the lender about its reverse mortgage service. . The partner smiles.
“You are the reverse mortgage department,” he said.
Mangus then worked to establish the dedicated Reverse Mortgage department in his new business and found notable success in establishing a Home Equity Conversion (HECM) Mortgage to Purchase (H4P) business through the use of continuing education (CE) courses designed for licensed real estate agents. The result is that H4P activity has become a noticeable part of its total activity.
Since H4P volume represents only a small fraction of the total business done in the reverse mortgage industry based on 2021 data, Mangus sat down with RMD to discuss their approach to successfully growing the H4P activities.
1% of the national HECM for the total purchase
Understanding the reality of domestic H4P business is key to contextualizing the success Mangus has had in his own business, he explains for RMD.
“Of the six million home purchases made in 2021, only about 2,200 of them were H4P,” he says. “The product is not even on the radar screen for [real estate] officers. I closed 28 H4P deals last year, more than 1% of the national total. My market share in this area continues to grow even if at the national level it is stagnating or even declining.
Mangus began teaching continuing education courses designed for real estate agents around 2011, when the mortgage industry was still looking for ways to fully recover from the 2008 financial crisis. of those classes turned out to be a difference maker for him, he says.
“Over the years, I ended up teaching courses on home improvement loans, mortgage loan insurance, mortgage mechanics, etc.,” he says. “Then about six years ago I taught a course on government loans and included a lesson section on reverse mortgages, and things were never the same again.”
His reverse loan production accelerated when he explained to his referral partners the intricacies of a reverse mortgage, but he said more specific interest stemmed from discussions relating specifically to H4P.
“When I started teaching this section on HECM for buying, I couldn’t get agents to talk about anything else,” he says. “I then developed two more CE classes that only deal with HECM loans. Over the past six years, my HECM output has grown steadily.
In 2020, its personal loan production topped 100 units and grew another 25% in 2021, he says. 60% of its volume comes from traditional HECM loans, 20% comes from HECM for purchase and the remaining 20% from HECM to HECM refinances, he says. The main difference in accelerating its activity has been to offer the CE courses to referral partners, more specifically to real estate agents.
The Power of CE Courses for referral partners
The idea of creating CE classes isn’t new, Mangus says, and it doesn’t just work for one type of partner like real estate agents.
“CPAs, lawyers, and financial planners also need CE credits,” he says. “If you can deliver value in a CE class, I think this strategy can work with most finance professionals. [to increase reverse mortgage business]. Realtor CE classes are required in all states, but unfortunately there is not much uniformity between states.
Mangus has had CE classes approved in seven states, he says, and there’s not much crossover in content when comparing variations offered in different states, he explains.
“If you’re a reverse mortgage professional interested in this marketing strategy, check with a few of your agent friends and the state real estate commissioner about what it takes to be a CE instructor and get a class CE”, he recommends.
For anyone interested in putting such a plan into practice, Mangus offers a series of “tips” that professionals can use to develop their own class offerings in their specific localities, particularly if H4P is a business segment. wanted for expansion.
“The first tip is to teach the H4P section first, as this will keep agents engaged when they find out they can actually get a paycheck on the loan,” he says. “Make sure you keep the H4P section and the refinance section completely separate. Their heads will explode if you don’t.
Mangus also says delivery practice is key, describing that even after teaching more than 200 classes himself, different audiences won’t react uniformly to the information. The delivery practice will ensure clear and concise communication of detailed reverse mortgage information. Stories and anecdotes that help contextualize information also help participants understand, he explains.
By telling these stories or anecdotes, anything directly related to H4P can stimulate both understanding and excitement, he says.
“A rhetorical question that I use tends to boil down to, ‘Who doesn’t want to buy a house for half price and never pay?’” he says.
Combining a Reverse Mortgage with a Retirement Strategy
Reverse mortgage professionals know all too well the potential illustrative power of linking the product to a comprehensive retirement strategy, especially as retirement in America comes under new pressures due to attributes such as rising debt levels and declining retirement savings. Directly linking the purpose of the reverse mortgage to the generally risk-averse nature of finance professionals can be helpful, Mangus says.
“Associate class with a retirement strategy. It’s a lesson I learned the hard way,” he says. “Showing people how they can extract equity from home is not as effective or impactful as tying the use of the product to a broader retirement strategy. Be sure to address myths related to “not owning the house” or “transferring equity to the bank” early in class. »
Connecting with the professionals you teach on an ongoing basis is also critical to the potential for future success, Mangus says.
“You need some sort of contact management system (CRM) to nurture class realtors and leads,” he says. “This is part of the long-term strategy to make you, as an instructor, your market’s trusted advisor on all things HECM. Quite often, clients and agents will take months, even years to recover. Staying in constant contact is crucial for long-term success.