After the Reverse Mortgage, with Brian Bailey

0:00 You or your client have a reverse mortgage, now what? Do they just sit on it until somebody passes and then experience a servicing nightmare? For too many people, that's the reality. They have a transaction and that's it. And then when the party's over, when the last of the borrowers pass, it's a scramble to resolve what they're going to do with it. And so really we I wanted today to talk with one of my good friends in this podcast, Brian Bailey, about avoiding both the nervousness and stress of a reverse mortgage, as well as the disasters that can happen post closing. Brian, thank you for coming back to the program. Hey, thank you, sir. Appreciate you having me. Hey, see we have an another guest behind you. Yeah, that's Remy. Remy. He's my cohort. Very nice. Okay, well that's the worker behind the whole thing. So he's the one who did all the work. So reverse mortgages, you know, I as I've mentioned you several times, I launched this podcast because I believe we should be doing a lot more reverse mortgages as an economy. I think that there are homeowners who have equity locked in who would benefit from at least looking at a reverse mortgage. And I think there are enough homeowners who buy houses for cash that should look at purchasing with a reverse. We talked about that last time. And combined, we should do about 10 times as many as we are to help people unlock that equity, but they don't. And one of the main reasons why is the bad reputation of the program you deserved it 10 years ago, not deserved today, but can be resolved with great service.

1:30 So let's talk a bit, Brian, about a reverse mortgage and trying to improve the customer experience post close, but I think it starts with well, before closing, right? The post close process really begins before you close. Correct. It's all about the questions. It's all about leading in and making sure that the you do the discovery phase, if you want to call it that, where you're really understanding what the borrower is looking for, what pain points they're looking for, and then what's their current setup? Do they have a financial planner? Do they have a CPA they work with? Do they have a an estate attorney? Do they have, you know, are they things all set up for, you know, a situation for, you know, the inevitable. And making sure that we're kind of leading in that direction, introducing them to the correct individuals and such, so. The lead up is equally important as everything else. So, let's talk about what are the things you tell a client regarding once the once the reverse mortgage closes? Because what we know is most customers don't pay attention or, you know, read the documents. It's just too complicated a thing for most people. And the problem is when the last borrower passes, the kids are trying to scramble through and find Oh, there's a loan? Didn't know that.

2:53 Oh, there's money owed? Didn't know that. Oh, we're foreclosing in 6 months or 3 months? Didn't know that either. So, talk a bit about what's the conversation you have with a client while you're you know, before you close the loan to at least prepare them, alert them to the possibilities. So, it's really a matter of understanding how the closing process works, what happens post close, and the servicing, and what happens when a an event comes up that where they the property has to be liquidated or the note is called due. So, in the in the process as we're doing the proposal and such, it's important that they understand how that all works. I try to do everything I can to get the kids involved or the heirs of the of the estate to so they know how it is. Cuz what really happens and it's sometimes it comes a bit harsh, but the servicers, as soon as they get notified of a death, and you know, we tell everybody like as soon as soon as something happens, talk to the servicer. Let them know your intentions. Do not wait cuz they will not. And so we try to get them to contact the servicer as fast as possible. Let them know their intentions keep the property through a refinance or to sell the property, whatever the case may be.

4:13 So cuz what happens is and this sounds really bad but it's when it when somebody passes away, the letter starts. The foreclosure process begins, you know, cuz that is how the title the ownership of the property get gets moved over. Not ownership, I'm saying that wrong. The legality to where the servicer can get their money back, right? And of course any other loan would be the same, whether it's a car, first forward mortgage, anything. They're the bank is looking at how they can get their money back. So triggers the foreclosure process to begin. The problem is when the sender servicer sends the letters, for somebody who's grieving, it sounds harsh. It I mean I can't get around it. It just sounds harsh. And so I get a lot of those calls not necessarily from my clients cuz I try to prep them up for that but I get it from a lot of others. Like, "Hey, this is happening. What do we do?" And such. So I think as loan officers, it's important that we do have that conversation with everybody. I want the heirs to have my card, my number, you know, when an event happens, talk to me. If you have any questions about something's coming up, like all of a sudden, my parents have dementia and hopefully we've already had POA set up ahead of time.

5:44 You know, we can kind of work through it together to help kind of lead them into so it doesn't seem as bad. It's when you're expecting that letter to come in and you know, oh hey, I got to call the servicer and you call them up and you talk about it. All of a sudden the tone really changes cuz the servicers aren't there to beat anybody up. But legality-wise, they send out these letters and written by lawyers and you know, it just it comes across the way it does just due to the nature of the product and nature of the situation that usually comes to play like somebody passes away or something. So the first challenge in the pre the pre-closing stage or the first opportunity is to talk about the entity because if the husband and wife take out the reverse mortgage in their name and one passes depending how it's set up, it may still be fine, right? Both are on the loan. It's the last surviving spouse. And there's some exceptions and other processes. Talk about your to with your attorney. But when both pass legally, if the title's in the name of the borrowers really nobody owns the property or should say the state owns the property but nobody controls the property at that point because until somebody goes to court and says, "Hey, I represent the state." called probate in California there's nobody can do anything. You can't pay the mortgage. You can't You can't sell the house. Can't list the house.

7:11 And so, you know, I know that it's difficult to say to a customer owns a property in their names, you might consider getting an estate plan which includes a trust to avoid that problem while you're doing the mortgage cuz they're doing a lot of paperwork already. But is this something that you talk about or maybe prepare them for after close and then they can deed the property in later? What's your What's your strategies for having that discussion before you close the transaction? Well, it depends on the scenario. Sometimes we have seniors who are faced with, you know, retirement shortfalls and they need to do something or have a strong desire to do something right away. They're in a pinch. You know, we'll deed it over to the trust afterwards. You know, that's not an issue whatsoever. A lot of times when it's more about the massive loan customer who's using it as a financial product as opposed to, you know, needs-based versus You know, what the word is escaping me right now. But some folks are needs-based. Some folks are more in you know, it's a benefit to them in their entire financial plan. They typically already have trust set up most of the time. So, the beauty of reverse where forwards you can kind of run into problems, but reverses it's great because we can close in a trust. We just get a copy of the entire trust. Make sure it goes to the legal department. They look at it and we close there. And so, that works out really good. And so, I don't encourage anybody to wait to get a reversed until they have that set up because it'll create so many hurdles.

8:46 It just it's such a it's such a That's what all comes out in the interview process is to really truly understand what those pain points are, like I said. Now, at the close, now they have transferred the title. If they did that they didn't do that, they now have a mortgage and in their name that will, you know, cost and that's true of with a reverse or regular mortgage, which is if you own the property in your name and you pass, you create a problem for your heirs if that's important to you. So at that point, you know, you can talk to them again. Now, post closing, one thing that's unique in reverse mortgages the HECM, the FHA version of it, has a requirement every year that the borrower certify they still live in the property as a primary residence and a couple other items. Seems to me that's a great opportunity for an originator to reach out to the customer and make sure that gets done. And then maybe you know, again, review. Do you have it in a trust or not? As a reminder, and by the way, who's helping you with that? It seems to me I have a good chance. So, staying in touch Talk to me a little bit about your strategy on staying in touch with customers. Post close.

9:53 It's exactly that, you know, when you about that time of the year, a little bit ahead of time, is to reach out. I try to reach out to my customers a couple times through the year. Like I just talked to one, you know, I just happened to be driving near her neighborhood and hey Carolyn, how you doing? You know, You know, cuz a lot of times seniors are lonely and they like to know that the people are thinking of them and stuff. So, you try to do that. That's I really try to create that relationship when I'm when I have a client. It's not just a transactional thing. It's a relationship. So, yeah, calling just ahead of time and then maybe another call up after about a month afterwards. Make sure they got sent in. Talking to them again, yeah, have you talked to your CPA? Have you know, shared that information with them? Oh, by the way, when we were doing this, you know, remember you're on the hook for paying your taxes and your insurance. Make sure that's getting taken care of. Make sure that they have their statement, you know, a couple months after the loan closes. It's good to kind of go over that statement with them because the statement is a little bit more confusing. There's a little bit more information on there, especially with lines of credit and everything for them to understand when they have access to how the whole thing works, what benefits they may have if they have Let's say they did get a windfall of money or you know, 10,000, 20,000 came and they sold a property up in Minnesota and you know, they have their residence down here and they want to turn around and they want to pay money towards the reverse. Now, that can go towards the line of credit. Making sure that they understand how that works and then re- recapping, yeah, what happens when the when the primary borrower passes away and you have a spouse on there, what are the benefits, how are they going to access the stuff, what if non-borrowing spouse meaning that let's say at the at the time of inception of the of the reverse, they're too young to qualify for the reverse. Well, the reverse goes into the primary borrower's name,

11:56 And then the non-borrowing spouse the when they calculate the PLFs, the principal limit factor, it's based off the youngest spouse's age. They get to stay in the property for the rest of their life. And as long as it's their primary residence. However, the line of credit is shut down. So, they don't have access to that line of credit anymore. It's just these little nuances that make reverse a different product than the forward that, you know, it requires more care. Everybody knows you get a forward mortgage, you pay make a payment for 30 years. You know, that's fairly simple. Reverse has got some different nuances and a lot of protections and stuff and it's important that they understand that. So, what percentage of your business is from consumers, I imagine past customers, referrals, and from say business type referrals of you know I guess Realtors® or attorneys or estate planners, is that a big part of your business as well? How would you What's your mix look like? I'd say 70/30 at this point, 70% referral straight referrals from my book of business and 30% from professionals. I'm that's one of those things I'm working on and diving into the world of AI for more marketing ideas and, you know, the aspects of getting the name out there and setting up more classes. Working on right now. I have numerous classes written together trying to work with the schools, real estate schools so Realtors® understand that the product is for purchase, so try to get that CE approved there and then as well as with the FPA, the financial planners administration for the CFP credits. You know, just got to get out there. That's what I said. It's like I don't feel like I'm a loan officer anymore. I feel like I'm more of a an instructor, a teacher cuz that every time you do this product, no matter who you're touching, you have to You really have to explain it to them, you know, so they can understand again all the benefits that it has.

13:57 I know we've talked before and I remember correctly you didn't start with reverse mortgages. You started as a forward originator, as a regular mortgage originator. Correct. Correct. I've been I got in the I got in the industry in 2008 right when the market was awesome. Really I was incredible to get into. Everything was crashing. But that's when I got in and weathered that storm and weathered a few since then and you know, that's But yeah, I started in forward world and love the VA product, but just not a lot of veterans in Arizona. Got a few but not as prevalent as say San Diego area, but so it's been more of the FHA product conventional, but now prices are going up quite a bit and now you're starting to hit some of those the higher end stuff and you know, but I just I don't know. I just really like the reverse. I like I like the aspect of it. You It really Like I said before in our podcast like I truly feel like I'm changing lives, you know, as opposed to just giving somebody a 30-year bill. You know, the on my thesis, we should be doing 10 times as many as we are, which you know, if every originator like you doubled your business, we would still need another five times the originators in the business. That doesn't happen overnight.

15:17 Nothing wrong with you doing 10 times more either. I'm all for that. But obviously companies need to And also I find that reverse mortgage originators tend to be older because they're serving typically customers who are also older. And their clients kind of aged a bit and now they're using a product that's more common. I guess exclusively for people aged. But as a career path, do you see the best candidate for this business, your colleagues of yours or competitors of yours, to be forward originators who you know the basics of loans but are and are willing to make the transition. Now I think the problem with them is they think it's going to be easier or some sort of gimmick. The reality is it's not easier, it's just different work. As you mentioned, more education. Or do you think it's better to start with somebody who's not in the mortgage business, who maybe is a better sales person, who's more consultative, and teach them the mechanics of the mortgage? You know, I don't have a clear answer for that, Bill. I would say that the best candidate's going to be one that has empathy and understanding and listening skills. You know, as far as instructor being able to teach the product, I think once you learn it, I don't know if it's necessary that you're so involved into or entrenched in forward world because there's a lot of things about the forward world that doesn't translate to the reverse.

16:42 It's definitely not a I don't think it's a harm for that transition, but I don't think it's a mandatory thing. It's just I think again, it's more about the personality. Can you relate with seniors? I don't think this is necessarily a great product for you know, loan officers in their 20s and early 30s to try to get into, but you know, well a lot of them are if you're pounding the phones and you're making the relationships with your partners like financial planners and CPAs and you have those contacts, great. You know what I mean? Like maybe they'll never even see your face and never really even know how young you are. It's just you're going to have that hurdle, but, you know, maybe you're going to connect better with the kids, the adults, the adult children, or the seniors that are looking for answers. And they're the ones that are going to introduce it to their parents as opposed to the other way around. So, yeah, I wouldn't I wouldn't say there's any limitations here. You just have to have empathy for what the seniors are going through. You have to have patience that they're not going to understand technology. You have to have patience that they're going to they're scared. A lot of them are scared in what they're dealing with. They're A lot of a lot of times people feel like if they're doing a reverse, it's because they failed. You have to get over all those humps. So.

18:00 Right. It seems to me that And none of those are true. None of those are true, by the way. You know what I mean? Like, it could be true based on the situation, you know, maybe like right now like retirement-wise, like I'm looking at like, "Hey, I'm going to probably have to have a reverse because I don't really have myself set up for that level of retirement to retire the way I want to, you know? But I or I have to like get rid of a lot of the hobbies I have, which is probably a good idea, too. But no, it's Yeah, it's People shouldn't be scared, too. It's Don't be scared to have the conversation. Well, it also seems to me that in a world of increasing technology, and I don't know whether or not it's the same title wave of people you hear in the news or if some of that's overblown, it just seems inevitable the march towards technology and depersonalization. In that world, the people who have the relationships are going to win. And technology can free us from a lot of the administrative work to have more time to have those use the empathetic relationships. And I think the originators who avoid that are going to be replaced cuz why would you At some point you don't need somebody who can get you the lowest rate. There'll be an AI that gets the lowest rate. But to know you had a lost rate and they can deliver it and or customize it to you personally and make you feel cool, you know, comfortable and confident with it, that's going to take a relationship.

19:22 And so I think that's why as a career path this is such a good opportunity for you in that and you know, others in that you can ride the wave of the technology to help you be more effective on the administrative stuff, but you have to really enjoy those phone calls. You have to really enjoy those conversations. Yeah. No, it's very true. It's I don't know where AI is going to go, but I'm not I'm not under any grand illusion that my career will be around forever, you know, it's that you see AI taking over things like, stuff that I would have guessed would have been last. You know what I mean? Like, how easy is it to drive a car? And they're driving cars and I've seen Waymos here in Phoenix where it started. I've seen Waymos pull some maneuvers that I'm like, man, like I don't know many drivers that could have navigated what they just did. And they're doing art and music and so many of those aspects of it at and that's what the algorithm. So to think that they can't do numbers would be, you know, would be difficult. But what AI can't do is have empathy. What AI can't do is create a relationship with a senior. So I don't think the seniors, definitely not the boomers, and I don't even think Gen X are going to be willing to not have that relationship. And I don't know, even Gen Z seems like they're more into having relationships.

20:53 I think millennials are about the only ones that I've really noticed that are perfectly happy with everything being digital. But yeah, it's to be determined. And as fast as it's growing, who knows? Who knows. Well, who knows where the future's headed, but it certainly I think it's exciting and for myself, I feel like my career's been extended because of all the technology. You know, I have you know, applications now that I can find agents to show listings for me. They can hold up at houses for me. So much of the work that you used to have to do as an agent can be outsourced and automated, which leaves me to talk to people and that's what I've always done well and give them good advice and to consult and find the unique one-off. I think that's the same thing with reverse originators that relationship is all about getting personal. I mean, I guess you could call an 800 number, but you're going to get an 800 number quality relationship and versus talking to a professional. Now, I noticed and I we've talked about this before, you probably put after your name CRMP. Now, which is certified reverse mortgage professional. The fact that you are one is one thing. The fact that you might have put it down below, but the thing I noticed with that particular certification, so many people take pride in it. Tell me why you think it's so important that designation. What does that show me about you or show prospective customer about you or why should originator who's in the space take the time to go through that process?

22:19 So, first of all, who gives out the CRMP designation, which is certified reverse mortgage professional. Who gives out that designation? It's not a lender, it's not, you know, somebody coming up with a cute little letters to go behind your name, make people feel, you know, warm and fuzzy. It's NRMLA, the National Reverse Mortgage Lenders Association. So, between Darryl Hicks and the folks over there, they're out there. They're in Washington D.C. They're pounding the pavement, dealing with the politicians, dealing with the lobbyists, making sure that both the loan officers like us in the field are heard as well as the clients and their needs, where it you know it's not just politicians, you know, getting their palms greased by some industry, you know what I mean? It's they're really truly the advocate for us, both loan officers and the client, to make sure that it's well understood. And when they came up with it, the big thing is it's the ethics. You know, seniors have been taken advantage of over and over. When I was in banking, I would see I'd have people come in like, you know, they hey, I won I thought I won the lottery with this Nigerian prince, you know, like or I won a Canadian lottery and you know, like seniors are like again, they're a bit nervous and fearful of what their future has and sometimes they really fall into some see unsavory characters. And so, the CRMP designation takes it to another level, like, you know, I'm reporting stuff over there all the time, you know, hey, I saw this advertisement. Hey, this letter that one of my clients got is very misleading, you know, and they take it and run with it to make sure that these people are held accountable.

24:17 I think it's I mean, what I wish I wish the VA, I wish veterans had some type of designation like that other than just hey, do you know the product, but an ethics thing because, you know, I'm a veteran. I've had VA loans letters I get in the mail, I'm just sitting there shaking my head like, you know, if I got caught putting this thing out, I'd be in some big trouble. I wouldn't be a loan officer anymore, but it still happens. So, I think that the CRMP, it's a difficult test, probably the one of the most difficult tests I've ever taken from securities and insurance licenses and yada. There's I've done a bunch and this was the one that really required focus and attention and was very in-depth and I think if anyone is dealing with a CRMP, they should feel rest assured like, "Hey, you're not dealing with somebody who does one or two of these a year or every 5 years, you know, you're dealing with somebody who really knows what they're talking about and is going to look out for the best interest and if you have any questions, you know, give a CRMP a call and you can get that on Nirmala's website, Nirmalaonline. They have a list of us there and they have a lot of resources as well. So, I like that. You know, I feel like those people are putting themselves forward.

25:35 So many people hide their email and their phone number. I'm thinking, do you look at that much? I mean, you can filter spam and whatever, but I feel like for me personally, it puts my accountability out there that, you know, I haven't sued anybody. I don't have any complaints at DRE about my service. My phone number and email, I'm not hiding my home address, my business address. You know, I you get the collector calls and say they're going to sue you or whatever, but other than that nonsense and the scam artist, I feel like Nirmala those members are kind of leading with their chest saying, "Hey, this is serious business and I take this seriously and so I've always, you know, felt really good. I've never had any I'll just say this, I've interviewed I'm sure 30, 40 different CRMPs. I have never had anybody who I was impressed with at the end of the conversation. I mean, not one. And I'm not easily impressed. I mean, I feel like I have pretty high standards and you know, my other podcast I interview attorneys sometimes and vendors and I walk away saying, "I'm not sure I want to business with them, but the you know, each CRMP is a little different and everybody you know, everybody has a personal style, but in terms of professionalism and commitment, it means a lot. So, hey Brian, look, I always enjoy talking to you. We're kind of coming up in the end of the hour. I really appreciate you. Anything in particular you have going on? I know we want people who want to find more about you. Reversefinancial.com is the website if you want more of Brian Bailey and then you also down below have his contact info. When he's not driving around with Remy, he is available. Phone number [phone number].

27:00 If you can't write that down, just reach out to me. I'd be more glad to make a make a introduction or referral. Brian, thank you so much for coming on today and sharing with us really good points about post closing and then I think just in general raising professional standards in our business. Yeah, Bill. And I again I said it before, I really appreciate what you do bringing awareness to the product and stuff and we need more people doing so and the fact that you're not even in the reverse space and you're doing this really shows that your level of commitment to your clients and stuff. So, really appreciate what you do as well. Thanks. Thanks so much. Brian Bailey, hey for the rest of you this is a Reverse Mortgage Podcast. We get together every week. Usually interview originators, sometimes managers or vendors to help us be more effective in our job whether you're an attorney, a real estate agent, a mortgage originator. We want to have all the tools to be able to help our customers get the best service from the best professionals like Brian I think on reverse mortgage, a really good guy. If I can help anyway, please call, text, email, put a comment here, like or subscribe, reach out to me if I can help at Bill Gross Probate on social media and as always make today your best day ever. Thanks so much.