Reverse Mortgage Veteran: Industry Opportunities Remain Elevated During Tough Economic Times

The Reverse Mortgage product category is designed to offer senior citizens a solution to financial problems, and since there is no shortage of such problems at the moment amidst economic instability and high levels of inflation, this could be a very good time to be involved in the reverse mortgage industry.

That’s the view shared by John Luddy – the SVP of Reverse Lending at Norcom Mortgage in Avon, CT. – in a new episode of the RMD podcast. Because of how the reverse mortgage may work for eligible borrowers, there could be a unique opportunity to address issues faced by seniors on fixed incomes, as has happened during the COVID-19 pandemic. , explains Luddy.

Why now can be a good time to step back

Luddy isn’t one to downplay the issues facing people across the country or the world, but the core of his belief right now stems from creating unique new issues that reverse mortgage professionals can address. able to help their customers solve it, he says.

John Luddy

“I think that’s why it’s such a dynamic space,” he says. “Because our job is to solve people’s problems. We offer a lot of solutions, and we see people with more variety of problems [and with] bigger problems. So we’re able to help more people with more products, but we’re also finding customers who need our help now more than ever. »

The reverse mortgage industry tends to react differently to tough economic conditions than other lending businesses, he says, in stark contrast to the challenges faced by term mortgages.

“You have to remember that we are looking at the world through the other end of the telescope,” he says. “So as our customers’ needs grow, so does our business. In the world ahead, they’re running around with serious concerns about what’s to come in the mortgage industry in the future, and we’re the opposite.

Luddy doesn’t want to sound like an “ambulance chaser,” he says, but it’s important to recognize how the business works and what the reverse mortgage product category can help provide for customers who may need the product, he said.

“We are the opposite of [the forward arena],” he says. “If our clients’ lives were rosy, they wouldn’t need us.”

Needs versus strategy

There are a few key differences Luddy’s company is seeing now compared to when the pandemic started. During COVID, more adult children of seniors were looking for a reverse mortgage as a potential option for their parents to create additional cash flow. With inflation and other economic volatilities right now, Luddy is seeing more creativity from seniors doing their research on reverse mortgages before speaking with him or another member of his team.

However, another thing Luddy notes is that there seems to be an increased interest in private label reverse mortgages (which he consistently refers to as “portfolio loans”) as opposed to a home equity conversion mortgage ( HECM).

“It’s the perfect storm of dire need out there, maybe because of inflation or maybe just because of life circumstances with higher appraisal values,” he says. “So that gives [seniors] the opportunity. Almost all of our pipeline today here at Norcom is in portfolio loans and not FHA loans, surprisingly.

Even despite higher interest rates, if Luddy or a colleague had to call a client back to revise the rate up, the answer isn’t a hang-up or a cancellation: it’s a question, he says.

“When I had to call and say [a client the rate went up], their only question is, ‘when do I close?’ says Luddy. “So all business [and] the angst the attackers are going through, all that drama about rising rates […] all this is not part of our world, our world is [solving] The problems [clients have].”

Not all needs are met by a private label option right now, he says, as there may be a particular need related to more consistent line of credit growth, for example. When these situations arise, the HECM is ready to serve as a potential solution, says Luddy.

“Before you start drilling, you have to make sure you know what the need is,” he says. “And sometimes, frankly, our customers can’t articulate their need because they’re not even fully aware of it. So before you sell the solution, you have to sell them their need. You have to teach them, almost, what their problem is and then offer the solution. And if it’s an FHA product, that’s fine too.

Staying agnostic about which product best meets their needs will be key, Luddy says. This will ultimately prove where the talks — and ultimately, the closure — will end up.

Listen to the full discussion with John Luddy on the latest episode of the RMD podcast.

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