Busting Reverse Mortgage Myths: How Loan Officers Can Make Sense of the Reverse Mortgage Industry in 2022

April 27, 2022

Check this out…

Right now, in 2022, 45% of baby boomers have no retirement savings.

But most of them – have a house.

So it’s amazing that there aren’t more people diving into reverse mortgages in 2022. Because the opportunity for everyone to win (the borrower, the lender, and YOU) has never been this huge.

But one thing that happens pretty commonly when loan originators are speaking with clients and potential borrowers is that they have to debunk a lot of the myths. There’s a lot of misinformation out there. 

These myths have been created over the last several decades…

“When we’re addressing these myths, we need to really understand that the reverse mortgage is simply a mortgage that allows seniors to access their home equity without the pressure of a mandatory monthly principal and interest mortgage payment.” 

So breaking it down to something your client understands, as a very easy comparison to another mortgage program that they’re used to having is a great way to enter into the conversation. This lets you immediately break down the barriers from all of the bad PR the program has received over the years. 

Some of the issues that have come up have been as a result of myths. 

The reverse mortgage a lot of times was blamed for the reason that seniors lost their homes. But oftentimes the reason for a lot of those defaults were because borrowers were falling behind on their taxes and insurance payments. So if borrowers are in a situation where they don’t pay their property taxes or homeowners insurance… they’re going to be in trouble.

Mythbusting Reverse Mortgages

MYTH: “Reverse mortgages are scary”

BUSTED: In its simplest form… this is just a loan with principal and interest like a car loan, not as predatory as a credit card loan. But it’s funny because people seem to have no problem signing up for a card with 25% interest! 

MYTH: “Reverse mortgages prey on seniors”

BUSTED: Okay, so where did all this come from? Where did all this bad PR originate? Back before the housing crisis, there were a lot of people that were selling predatory annuity type programs where somebody who was able to sell insurance might be able to make a very big 25% commission on the policy. In some cases, they were convincing people to use reverse mortgages to fund some of these adverse insurance products they were selling. And because everybody is familiar with an annuity, and nobody was familiar with reverse mortgages… reverse mortgages were taking a lot of the blame when in fact, they were just being used as a means to an end. The real designation of the reverse mortgage is to allow seniors to age in place for the rest of their lives with dignity. 

MYTH: “It’s too complicated and people won’t understand it”

BUSTED: Ask a borrower to explain the intricacies of exactly how compound interest works on a traditional mortgage. Most people don’t understand that either. But because it’s more familiar, it doesn’t have the same barriers of entry.

MYTH: “They want to steal my home”

BUSTED: Not only does nobody want your home, but in a lot of cases, it’s the exact opposite. We want to make sure that nobody can take your home, and the intent behind the program is aging in place. 

MYTH: “What you just said, sounds too good to be true. I can borrow this money, I don’t have to pay it back. All I have to do is pay my taxes and insurance and use the home as my primary residence. And then I stay here forever. What’s the catch?”

BUSTED: This comes up a lot. So it’s important as loan officers that there are still qualifications for the program. There are income qualifications, credit qualifications, and other guidelines that must be followed. However, this program was designed to allow seniors to age in their home, and to be able to not just not just survive, but to really thrive in the future.

So this really isn’t too good to be true…

We’re talking about something that was designed for this specific need of allowing seniors, many of which are on fixed income, or living off retirement assets, to be able to actually live in their home and enjoy living in their home throughout their senior years. You need to walk them through how it works, educate them and let them see that it’s really not too good to be true. This is a legitimate program. It’s not some kind of gotcha program or boogeyman, like a lot of the industry wants them to believe. It’s designed solely for the senior population to really be able to age with dignity.

(To see MORE myths busted, scroll to the bottom and join our FREE course)

How Can an MLO Get Into Reverse Mortgages?

Who should and who should not consider this as a program that they would like to offer to their clients? 

First off, you need to know that this is much more of a life conversation than a transaction. This is about the pain points that exist in someone’s life and it does require an extra layer of support. 

It requires getting into more of those intimate details and understanding who this person is, and what they’re trying to accomplish. And so it is a longer cycle, as far as talking about the sales side of things. 

We like to talk about this as a program, not a product. Because “product” conveys the transactional mentality that we might see on a traditional mortgage side. But this is a program that allows somebody to age in place, give them the dignity back in their life, and provide them with something that’s going to solve those pain points. 

So if an MLO is out there saying, “hey, I’m looking for a program that can make a difference in my clients lives,” I think this is perfect for them. Because a lot of seniors simply don’t have enough to be able to do what they need to do, and actually enjoy their lives.

Many are barely making it and need some additional assistance. And since their largest asset is sitting there in their home, we’re simply giving them the key to be able to unlock that asset.

Next Steps for Mortgage Loan Originators

As you can see, there are a lot of myths surrounding reverse mortgages in 2022.

But there’s also a ton of opportunity! 

Because by 2030 – all Baby Boomers will be 65 or older. And the data shows that many of them don’t have enough money to retire “comfortably.” So a lot of them will be looking at getting reverse mortgages to help them make it through the golden years.

As you can see… this is a big money-making opportunity for loan officers and mortgage originators who are in the know. 

Which is why you should consider our free course specifically designed for MLOs who want to do reverse mortgages.

There’s no catch. There’s no cost. Just pure value, where you’ll see:

  • How reverse mortgages work and who they can help…
  • The misconceptions that exist around reverse mortgages…
  • How traditional loan officers can make great money with reverse mortgages…

Sign up for the free course here

Thanks for stopping by,

Team Notaroo