Why wouldn’t you consider a lender in the reverse mortgage industry as a “helping” professional, such as a doctor or social worker? If you haven’t, you should! A reverse mortgage company is in the business of helping provide senior Americans with an option that allows them to stay in their homes and receive the extra cash needed to pay bills, cover medical expenses, or simply secure a cash reserve. In fact, the National Council on Aging (NCOA) estimates that reverse mortgages can help 13.2 million people pay for the services they need to stay in their homes.
As lenders search for ways to distinguish themselves in the marketplace, that same helping mindset can give them a valuable edge. When lenders truly care about their customers, it shines through in exceptional customer service. Customers become advocates and a rich source of referrals. Word-of-mouth marketing is very powerful. It’s also free.
Now is a particularly good time for reverse mortgage lenders to focus on growth. The reverse mortgage industry is poised to grow by as much as 20 to 40 percent over the next 12 months, aided by the new HECM Saver and the improved HECM Standard, favorable demographics, and increased advocacy to raise awareness of reverse mortgages.
Many Americans are confused or even wary of reverse mortgages. They don’t understand what they are, how they work and what the benefits are. While 67 percent of older homeowners have heard of reverse mortgages, just nine percent are likely to use this financing option to pay for assistance at home, according to the NCOA.
Guidance at a sensitive time
Great customer service can help allay customer concerns, highlight the benefits and make the overall reverse mortgage loan process less overwhelming. It can also address customers’ emotional needs. While a reverse mortgage is primarily a financial decision, it also involves sensitive issues, such as the prospect of declining health or loss of independence.
Caring and competent service at a time when people may be feeling vulnerable is a sure path to success for lenders and the reverse mortgage industry. But lenders have to be sincere. Every company promises great customer service, but far fewer deliver. In order for lenders to succeed, they need a caring approach, but they also need a solid foundation, such as the right internal systems and technology and a well-trained staff.
They also need to make sure they have a solid public image. In large part, that image is based on the aggregate experience of many customers, underscoring the need to offer each customer the same high level of service.
Potential customers looking for information often turn to organizations, publications and other sources they trust, such as the AARP or the Better Business Bureau (BBB). A positive reputation or a great rating from the state and national BBB, for example, is a significant advantage in attracting new customers.
On the flip side, clients who are dissatisfied will make that known by complaining to the BBB or other organizations or posting negative comments online. Online comments, positive or negative, can have a big impact. Nearly 80 percent of people ages 50-64—and 42 percent of those who are 65 and older—are online, according to the Pew Research Center.
Customer service so good, they’ll tell their friends
While there is a significant opportunity for growth among reverse mortgage lenders, particularly those with a good reputation, the initial contact is when the one-on-one personal service begins. From that point, lenders must be focused on anticipating the customer’s needs. Some will need moderate guidance; others will need hand-holding throughout the process.
What follows are five strategies to help lenders deliver the best customer service, inspiring confidence in their clients, differentiating themselves in the marketplace and developing valuable referral sources.
1. Get personal
Make it easy for potential customers to connect. Often, the most welcoming thing a lender can do is to have a person—not an interactive voice response (IVR) system—answer the phone. Older adults, in particular, do not want to navigate an IVR.
The personal approach also drives the sales process. Every person’s situation is different and it’s important to take a holistic view of a customer’s circumstances and understand how the proceeds will be used. Only then is it possible to know if a reverse mortgage is the right solution. This in-depth analysis should be the focus as the customer moves to application and processing of the loan.
Reverse mortgage lenders should also work to make the process transparent, understandable and comfortable. They should explain what the loan process entails, how long it takes and what documentation is required.
2. Offer a second counseling session
While the reverse mortgage process is second nature for origination professionals, there is a lot for potential borrowers to absorb. They may not fully understand all the nuances in the first counseling session. Financial terms that may have seemed clear can be puzzling on review. New questions may arise with the reverse mortgage process, and family or friends may voice additional concerns.
Offering a second counseling session can help in a number of ways. It underscores the lender’s commitment to act in the customer’s best interests, making the client more comfortable. When the customer signs off on the mortgage, everyone can be confident it was done with full understanding.
3. Encourage communication between brokers and underwriters
While some lenders do not typically encourage communication between brokers and underwriters, it can have a significant impact. A clear exchange of information helps the underwriter make a decision based upon facts, not assumptions. By helping the underwriter fully understand the borrower’s situation, the lender can offer a mortgage with terms that are most favorable to the customer.
4. Work with the customer’s timeline
Do the customers have an immediate need for the money, or do they want to close at a later date? By establishing challenging cycle-time metrics and meeting them, lenders can be sure they can close on the loan when the customer is ready. One good goal is to surpass, not just meet, U.S. Department of Housing & Urban Development (HUD) requirements. Setting and meeting firm deadlines also makes the process much more predictable, thus lessening customers’ stress.
5. Create lifelong customers and referral sources
The lender’s commitment shouldn’t end once the loan is closed. For example, one consistent stumbling block for customers is that they must pay their insurance and taxes separately. Since many people are accustomed to having insurance and taxes rolled into their conventional mortgage payment, they fail to plan for these expenses and come up short.
By using strategies such as sending a notice reminding customers before the payments are due, lenders who also service their loans have an opportunity to once again demonstrate their personal concern. This avoids complications and makes the customer feel cared for, which helps generate additional referrals.
A growing market
The need for reverse mortgages is growing. Despite the housing bubble, home equity remains an important resource for many people. Using a combination of facts, experience, personal attention and exceptional customer service, lenders can offer people the help they need, often at a critical time in their lives, and gain a customer and advocate for life.
Scott Peters is president and chief executive officer of Generation Mortgage Company. He may be reached by phone at (404) 995-7870 or e-mail [email protected]