Reverse Mortgages as an Inflation-Fighting Tool, with David Rider

0:00 Hey, welcome to the Reverse Mortgage Podcast. I'm your host Bill Gross at Bill Gross probate on social media. We get together and interview some of the top producers in the reverse mortgage world as well as vendors to learn how to be more effective in our business and how to be more effective with our clients. We're excited to have today David Ryder with NEXA Mortgage. He's also a CRMP. David, thanks for joining us today. My pleasure. Nice to be here, Bill. So, I know we put the topic as reverse mortgages as an as an inflation fighting tool. Tell me by how reverse mortgages specifically can help homeowners with equity protect the equity and or fight inflation. So, there's a couple of ways. And you know, the reverse mortgages it's more complicated than people think, but it's really a simple concept. It's a way to lock in the equity of your home and to reduce your expenses. What a reverse mortgage effectively does allows you for most people approaching retirement age or even in retirement, they go in with a mortgage payment. Let's just say $2,000 mortgage payment, $1,500 that is principal and interest. By getting a reverse mortgage, you stop having to pay that monthly principal and interest. That gives you $1,500 a month in your right pocket that you can then go pay your bills. That's It's hard to find a job that will do that. Exactly.

1:18 Give you that much money. So, it's a great inflation hedge. Fantastic. A couple of things I noticed off the bat. First off, you have on your name you add the word CRMP. Now, I'm in real estate we hand out designations like Halloween candy and they're about as viable as the wrapper. But you know, I've interviewed a lot of CRMPs and I've also interviewed the executives who run the organization and it really is to my mind the only designation I found I'm trying to think that really creates value for the recipient meaning that it recognizes you for your production as well as hard work to get it as well as it's a great tool for us who are selecting a reverse mortgage professional to designate as somebody worthy of our worthy of our notice. Tell me about the CRMP designation, what it means to you, what you know, how you got it, and why it was important to you. Okay. So, for those that may not know, CRMP Certified Reverse Mortgage Professional. And Bill, I agree with you. That in the mortgage business and the real estate business, you can go to a 4-hour class and be an expert. I'm not quite sure how that works, but that's what they say. And that's what's happening in the reverse mortgage field as well. So, the CRMP is an actual certification that requires time in business, time in transactions, letters of recommendation, and a national test that some people have called a butt kicker. It's an actual FHA test. You go to a national testing site, very much like real estate agents do. You have to sign up. You take a 150 question. You got to pass it.

2:51 And then there's additional background checks that go over and above what a regular mortgage license originator would have to go through. So, the reason why I took it is the reverse mortgage, again, can look like a very simple product cuz the concept of it is very simple. The impact that it has, and I'll be very transparent. When I first got into reverse mortgages in 2015, not knowing what I didn't know, unfortunately, I buried some bodies out in the desert, you know. I'd hate to say that, but it's just the truth. I gave some customers some deals that probably weren't the best for them. They didn't know I didn't know. I don't like living that way. When you look at a reverse mortgage, this is typically the single largest investment or the single largest source of funds that people have in retirement. And so, that money's important. It's not going to come back anytime soon. So, I went ahead and did my time and got the CRMP because I want to give proper advice and understand the financial impacts that these mortgages can have. So, unfortunately, people just go out and do them and it's sort of like going to a general doctor to have heart surgery. You might want to go to a specialist. 100% as a real estate broker I can say if I ask 100 mortgage lenders who does reverse mortgages, 99 will say I do and 98 haven't done one in a year or maybe did one in the last two or three years.

4:17 And so this is a very sophisticated product. I think as you said it's complicated but simple. But it has to be used I think like any tool properly and that's why you think finding somebody who can really walk you through the process personally rather than just a call center is so important. The thesis I that I launched this podcast on is that as a market we should be doing 10 times the reverse mortgages we are but for the bad reputation product because of I think the call center mentality is one of the reasons why. And the lack of education about the opportunities. So, what are one or two of the of the use cases of a reverse mortgage that you find customers just weren't aware of when you bring it to their attention they're going to jump on it and most appreciate your service? I'd like to there's two of them that I'd like to point out. I'd like to point out my very first reverse mortgage and what really tugged my heart is I was doing a reverse mortgage for a lady and again, I didn't really know what I was doing. I was getting into the market trying to explore a little bit and she broke down we were at the signing table and she broke down in tears and she said you just saved my eyesight. And I looked at her a little bit strange I said, "What do you mean I saved your eyesight?" She goes, "I was at the point where I could not afford my $350 eye drops that I have to spend on a monthly basis until you came along with this reverse mortgage.

5:36 You want to talk about touching the heart? That touches the heart. So, that's what led me to understand that this has a much greater impact than no offense to a first-time home buyer or move-up home buyer or refinance, they're just going along with life. This is life-changing for a reverse mortgage. And then when I came to find out through my pharmacist of all people of how strong these are. So, I have a I have a very smart pharmacist. As you know, as we get older, we gain doctors, lose friends. It's just a fact of life. And a pharmacist That's so true. That's so true. I thought it was just me. I said, "What I've got so many doctors now and I'm basically healthy. It's just the maintenance is like the oil change guy, the tire guy, the air conditioning guy, the this guy." And a car is a mate you're so I never thought of that. You're right. I'm sorry. It's Oh, no, that's it's a it's a fact, you know. You know, it's a fact. I have three pharmacies. I have Walgreens for this, I have a USC tech for that, I have another one online for something else because it gives it you better pricing. I have three pharmacies and I think like six or eight doctors. I wish I had that many close friends. Well, they become your close friends cuz we go see them and we need our pills. That's exactly right. Exactly. So, my pharmacist, he had dabbled into real estate, got a real estate license, bought seven, eight houses, were, you know, renting them out, things of that nature. And he sold his big house and he was moving into a retirement community and he wanted a reverse mortgage. And I asked him, I said, "You have all the money in the world." He goes, "David looked at me.

7:08 I weigh 250 lb. I don't exercise. I'm lucky if I get a golf game in. My wife is younger than me. We don't need the money today. But when I pass, which statistically I'll pass somewhere in that 75 to 80 range, my wife will have an additional $500,000 liquid to replace any income that I brought in and give her the safety and security to know that she doesn't have to move. She knows that she has plenty of money. So, we don't need the money today. We are getting the reverse mortgage for 15 years down the road because a component that people forget is that line of credit growth. Right. So, huge financial tool to plan for the future. Or if you're someone like me, maybe you didn't plan for retirement quite as well as you should. But even at 62, if you have the equity to get a reverse mortgage and a forward mortgage, you make a payment and it's sort of like when you make that payment, you're wrapping it up in Saran foil or in aluminum foil. You're putting it in a lock box. You're digging a hole in your backyard and you're burying it 3 ft underground because you'll never be able to touch that money again. With the reverse mortgage, you can make a payment and instead of wrapping it up and locking it away, that payment goes to a line of credit that then grows at a rate of return that's equal to your mortgage.

8:35 So, you're paying yourself Right. As opposed to paying the bank. It's such an important piece, the line of credit part. I live in West Los Angeles and based on the fires, you know, there we have two types of customers. One, you had their lot, they bought the house in 1980, paid off the house, worth $2 million, older house, haven't remodeled yet. And fire burned down and they're going to wait in line for the insurance company to pay them off. Who knows how long they're going to wait. And then we have some of our customers who had a reverse mortgage or line of credit. And at least they're able to access whatever they set up. Like I said, it grew over time. So, if they're smart, they might have a line of credit of four or five hundred thousand dollars that they could really write a check and buy a house somewhere else. You know, they have to pay off the and sell the lot. But at least they have access to the equity to make those decisions versus we have other clients who are like waiting for the insurance and they have to liquidate stock in order to have some living expenses cuz it's been a few months now and they said they want to travel, but again, they have to liquidate their you know, in income portfolio. It's just a mess. I think it's such a powerful tool that literally every customer I have everybody in the world who has a house you know, with equity, this screen clear, should have a line of credit. Why would you Why would you not? Right. Well, for a And let me give you a real-life example, one that's near and dear to my heart. So, my parents, my father just passed away in November. He was 91 years old. Now, it's 91 years old, passed in bed, cigar in one hand, cocktail in the other, surrounded by loved ones. Isn't that the way life is supposed to be?

10:09 Wow. So, nothing but celebrations for him. But, the reason his big fear was being placed into a into a home. Yeah. Well, they had a reverse mortgage on their house. We were able to allow him to stay in home cuz we didn't have that housing cost. Instead, we were able to divert money over to bring in some caretakers, etc. If we had not had that reverse mortgage on their house, I don't know that he would have been able to pass in the way that he passed. So, again, life-changing impact that these things and you can't take the house with you. And here's the little secret that most people know in their heart, but they don't want to express. Our kids don't want our house. They don't want our China. They don't want my prized guitar collection. They don't want my knickknacks. They want my money. If we're being very honest. And that's okay. That's where they're at their life. So, why leave the kids with a mess of a house? Put a reverse mortgage. Don't borrow from your kids. Don't have your kids support you. Live your life. And then when you pass, there's a path of what's going to happen with the house, whether you have equity, not have equity. It's been thought of. It's a great way to progress on as we get older. One of the I see political moves in LA because of shortage of housing, of course, now exacerbated with the fires, is kind of downgrading seniors who want to live in their house.

11:38 And some of that is still like in my house, you know, I'm in my 60s, my wife is in her we're in our late 60s, and our master bedroom now is upstairs. Now, we could flip it and use a downstairs bedroom if we wanted to or needed to. And so, there's no reason why we couldn't live here. And my daughter with two grandkids so far lives five blocks away. Why would I want to move to an adult center an hour away, two hours away, when I don't care what age you are, if you could walk or your kids can walk to your house or your grandkids can walk to your house, if that's your choice. Now, again, the reverse mortgage gives you the opportunity. Sometimes people will say, "Well, you need more medical support." But with a reverse mortgage, you can finance perhaps improvements to the house to make it more friendly for walking and handrails and things like that. There's professionals who do that. And as well as getting the medical care that you might need at the home. My next-door neighbor has that. They have full-time care cuz they got the insurance and they got the reverse mortgage, and they told the kids, "Hey, you know, we have so much we're going to give you, but we're going to use as much as we need to for Mom. She's living in the house and unfortunately getting ready to pass." But she's been there for 3 years, and they had to put in ramps and get a caregiver. But they spent the equity for that so she could live where she wanted to rather than forcing her into an institutional setting. And I think the key is not one decision's right or somebody else's decision's wrong. It's your house, your equity, use it the way you want. And here's a tool that you can, if you customize it, will give you some additional choices and some additional power. And I think as a real estate agent, that's always our goal, give our customer the choice and fulfill what they want, not what we're supposed to do.

13:13 Well, recent studies say that 98% of all people would rather age in place in their home, and it's healthier. They have their friends, they have their family, they know their grocery store, they know their dry cleaner, they know the people, and it helps bring a continuity. In fact, if you look in some of these institutional places, they're creating a home environment. There's one in Las Vegas where they have the storefronts and the house fronts because people miss that interaction. So, yes, we all rather age at home. Yeah, I would say in my experience, 100% of all customers would rather age at home if they can. It's 100%. And second, that the ones who move out, I think there are medical options, you know, handrails, safety rails, ramps. Again, maybe an addition, maybe an ADU in the back to make that the master bedroom. Maybe live in the ADU and have your kids live in the main house. But those are options that with planning and money, you can resolve some of those issues. Have your caregiver come in every day to use equity for that perhaps. You might say, "Well, that's expensive." Well, but if it's your equity, why not use it? Have them come visit you daily or weekly or whatever you need. And so, I think the again, it's not really about you or me telling people how what they should want, but it's really giving people a chance to use it. Now, these are This is a very sophisticated tool. I mean, just in our conversation, it you know, I have a podcast on this. I've written reverse mortgage loans. I don't write any more new loans.

14:44 I did years ago, but I've written a couple. As a Realtor®, I've used a couple on transactions. So, I feel like I'm very much up on it. And yet, even when you talk to me about it's kind of hard to follow because it's a very sophisticated tool. So, let's talk about how do you how do you get the chance to share with prospective customers or the referral sources this tool and get a chance to explain it to them. I know there's mandatory counseling, but that's not going to teach them really how it goes. So, how do you convey to your customers and then find the right option for them to execute that plan? Great question. So, we do a lot of what you and I are doing right now. One of the things that I love about my reverse mortgages, and I have two sets of clients. I have local clients, I have distance clients. Obviously, for my distance clients, if we can do a Zoom call, that would be great. A lot of my one-on-ones in the mortgage world, as you well know, Bill, you don't get to see your clients anymore. It's all done online, it's all done through computers. In my reverse mortgage world, the greatest joy is going out to a client's house. And if at all possible, I have driven 200 miles to go see a client for several reasons. One, I can check out where they live. Now, that may sound a little bit strange, but you mentioned it. If you're 75 years old and you can't get up the stairs, and you want to age in that house, we got to pick up different solutions. We have to make sure that the house fits the needs, because the common problem is people think of today, they don't think about how they're going to feel 5 years from now. So, my process is to take them down that journey of what does it like What does life look like 5 years from now, 10 years from now, cuz that's really where the impact really starts.

16:30 I had surgery years ago, about 10 years ago. I was really lucky that they kind of pushed me to put in some of the safety bars and things that I would need, you know, I don't need now, but I might need 10 years from now. But they're there now, and they're comfortable. You know, bar to get in the bath We have a shower bathtub and a bar for, you know, the stairs. We reinforced that and a couple other places in the house. And I thought about wow, you know, there are customers who really need like a professional come in, go through the house, here's those recommendations, it's going to cost whatever it is, 3,000, 5,000 dollars. But when you have a house that's worth a million dollars paid off free and clear, and you don't want to move to an adult care facility for safety reasons, some ramps and some bars will go a long way. And maybe once a week, maybe have a shopper who does shopping for you. Maybe you have somebody who comes in the house and you know, just clean up organizes for you. But that additional work can give somebody the life of dignity that they want rather being forced off into some institution. And I And I can tell you with my parents, my wife's parents, and every customer I've ever met, nobody ever says, "Hey, I want to go to that adult facility." And I've been to some of them that are nicer than their house. They have the big pool and the community room and facilities. I go, "Wow, I would like to live here. It's so nice." There's one in Santa Clarita I went to once like, "Wow, you know, and it was 55 and older and I was like probably 58.

17:48 Hey, we should maybe But, you know, people want to live in their home with their neighbors, their lifestyle, their stores, their whatever. In my case, I'm religious. We have a synagogue nearby that we're very active and involved. They're not going to recreate that at that other facility at the same level. Some do a really good job. But again, this is about empowering people to do their choice. So, what is one I know there's several, but I'm going to give you a chance. What is the one or two biggest misconceptions when you meet with customers and they're interested, but they're just not ready to go and you kind of dig out of them and they say, "Well, you know, to be honest, David, this is the reason why we don't go to where to go forward or not ready to go forward." What's the one or two most common misconceptions you get that you'd like to kind of help displace from the industry? If you Sure. Well, we all know the number one misconception is the bank owns your house. And the bank never owns your house. This is a mortgage. One of my jobs is as I tell my clients, "I'm here with you for the rest of your life and on the paperwork that we're creating, we're going to write my name, my number, my email in big bold letters because when you pass, because we do talk about the passing, it is going to happen. When you pass, your children are going to be calling me and saying, 'David, what is this and how do we do this?' So, what people don't understand is you never ever have to lose the house. If the reverse mortgage person passes, the children can still inherit the house. If there's equity, they inherit the equity.

19:19 If there's not equity, they get to buy the house at a below market cost. So, if they want the house, the house is there. But again, the real misconception is parents thinking their children wants the house. We don't live on the family farm anymore. What children want is their parents to be safe and secure and happy. And so, a lot of folks think that their children would be against the reverse mortgage, which is the number two item. First is, I lose control of my house. No, you don't. Second, my children would be upset with me if I got a reverse mortgage. I'm spending their inheritance. It 99.9% of all children that I've talked to said, "Please help my parents. Please help my parents." Yeah, I agree. It's my experience, too. You know, one question you're a little slumped down now or maybe some camera angle, but I know you're wearing a shirt that has the a name of the company NEXA that you're affiliated with. Talk a little bit about of all the mortgage companies, why you affiliate with NEXA Mortgage? So, NEXA Mortgage is the largest mortgage broker in the nation. We have over 3,000 LOs. But let me tell you the reason why I'm there is when I first got into the reverse mortgage business, I was lucky to have one outlet to take a reverse mortgage. So, everything was a was a hammer at that point in time. No screwdrivers, no pliers.

20:41 NEXA Mortgage being the largest mortgage broker, I have 12 different reverse mortgage lenders that I can go to. Now, you may say, "David, why do you need 12?" I don't need 12. You know, two or three would probably work, but some lenders have specialized products, a proprietary jumbo reverse mortgage. I have a reverse mortgage lender that will lend on unwarrantable condos in Florida. That's huge right now. So, having that selection and here is the other thing that I that I found out about this is so, being a CRMP, one of the things that I do for NEXA Mortgage is every Thursday, I post out the rates of reverse mortgage companies. And Bill, you can appreciate this. The difference in spread between for the exact same scenario can be anywhere from four to six points. Well, that's money for my clients. Right. Is what it really is. And so, I want to be able to give them as much money as possible. Well, I'd like to get on your rate list if I can, but more importantly, and I think that speaks to the lack of education and opportunity for improvement in this product by educating and I think also directing business to professionals who are going to use that money rather than just enrich themselves to get the customer the right solution, to pay for the cost or whatever it takes to get done. So, I appreciate you sharing that with us, David. Thank you so much for joining us.

22:02 Again, David Rider is a CRMP, which means he's a certified reverse mortgage professional, and is with NEXA Mortgage, one of the largest companies in the country, that offers him a wide variety of choices. I really appreciate you taking your time to join us here today and to share with people about reverse mortgages. If you want to hold of him, davidrider.com is the website. Phone number [phone number]. It's on the screen. Of course, if I can help, it'll be in the description down below as well. David, thank you again for joining us and helping us learn more about reverse mortgages. My pleasure, Bill. Thank you so much. And there's his picture with his cute little sunglasses. I thought I'd just show it to you as well. Thanks so much. And for the rest of you, this is the Reverse Mortgage Podcast. We get together Oops, lost my spot there. We get together every week and talk about reverse mortgages. We work with some of the top producers in the business as well as executives and vendors to learn how to use this product to help our customers, help our business, and help people that we work with on a regular basis. We have a Facebook group, so feel free to go there for referrals, questions, for more content, some videos I put up there as well, or post your own reverse mortgage content if you want to see as well if you're professional in the business. Again, I'm Bill Gross at Bill Gross Probate on social media. We appreciate you spending time with us today. If you like it, please like it. If you don't, put in a thumbs down. Put some comments in and subscribe if you like the channel. You get more content like this. As always, make today your best day ever.