Reverse mortgage loans are like prescription medications. They should be prescribed (not sold), and utilized when they are deemed the best solution to solve problems or achieve objectives. They should not be purchased from aggressive marketers who lack credentials and are merely after a sale.
Unfortunately, reverse mortgage marketing seems to appear everywhere—online, TV, direct mail, telephone, you name it. But not all reverse mortgage promoters are equal. Some aren’t even licensed lenders or brokers; they are lead generation companies that simply gather your information and sell it to lenders (often multiple times) for sales solicitation.
How can you make sure you’re getting the right prescription, from a qualified professional? Follow these tips:
Tip 1 – Learn and choose. Don’t be sold.
The key to making the right decision is education, and choosing a provider that will take the time to listen, learn, and focus on your needs and desires. This can only be accomplished through consultation and detailed discussion, which should include an explanation of all options that may be available (e.g. a traditional mortgage or home equity line of credit; sale of your home to downsize or relocate; a sale and lease back arrangement; assigning the title to heirs and reserving a life estate; or perhaps even taking in one or more boarders).
The easiest way to compare these options is through a face-to-face meeting (not a call to a 1-800 call center). Then, if a reverse mortgage loan appears to be a feasible consideration, you can segue into more in-depth discussion about the features, pros and cons, costs, operations, and responsibilities of reverse mortgage borrowers.
Tip 2 – Check for professional certifications.
The best place to start shopping for reverse mortgage loan consultants is on the National Reverse Mortgage Lenders Association (NRMLA) website. In addition to providing a wealth of valuable information about reverse mortgages, the NRMLA provides a Lender Locator Tool that identifies qualified reverse mortgage brokers and lenders in each state.
Look for the CRMP (Certified Reverse Mortgage Professional) designation, which is the highest professional certification in the industry. CRMP qualifications are rigorous, requiring a minimum of three years’ experience, passing a national certification exam, completing continuing education each year, and executing a formal agreement to follow the association’s Code of Ethics and Professional Responsibility. CRMPs are recognized as the industry’s best.
Tip 3 – Consider the value of a local provider.
Be aware that the reverse mortgage promotions most visible on national TV and other media are produced by large institutional lenders and lead generation companies. Their objective is to generate a high volume of “leads,” which end up in the hands of sales representatives in large call centers. It’s hard to imagine how volume-driven mass marketing organizations can, or will, prioritize consumers’ best interests above profitability objectives.
Tip 4 – Know the difference between a reverse mortgage broker and a lender.
A reverse mortgage lender is a bank or licensed mortgage company that can close and fund a loan in their name. The lender may hold and service the loan in their portfolio, or sell the loan in a secondary market with or without retaining the rights to service the loan going forward.
A reverse mortgage broker can originate, but does not close, a loan in their name. Instead, brokers will submit the loan to a lender. Brokers may represent multiple lenders, which gives them (and you) much more flexibility: different mortgage programs, pricing options, and diverse underwriting policies to better fit individual needs. Both lenders and brokers are subject to federal and state lending regulations.
Conclusion:
- The decision to utilize a reverse mortgage is personal, and should be rooted in knowledge and understanding, not driven by aggressive sales schemes.
- Lenders are limited to providing their own products within the restrictions of their in-house rules. Brokers, on the other hand, provide consumers access to a larger selection of reverse mortgage loan programs, varied underwriting guidelines, and (most often) more flexible and competitive pricing options.
- Brokers, for the most part, are the local guys that meet with seniors and their families face-to-face, usually in their homes. They are the ones who voluntarily step up and earn CRMP certification. They are the elite among reverse mortgage loan originators.
Ready to learn what makes sense for your situation, goals, and long-term needs? Need help talking to your parent or loved one about reverse mortgage loan options? You are welcome to contact us with any questions or to arrange a time for a free (no obligation) confidential consultation. Call us toll-free at 800.599.8700.
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