Unleash the Power of Home Equity with a Reverse Mortgage, with Matt Harrison of Movement Mortgage

0:02 Welcome to the Reverse Mortgage Podcast. I'm your host, Bill Gross. We get together every week and interview top producers that do reverse mortgages at a high level as well as vendors. And the idea is to help educate and to help us use this tool more effectively for our businesses, whether we're Realtors® or originators or attorneys or wealth planners or related. This a powerful tool that we're just scraping the surface with. My thesis is we should be doing 10 or 20 times as many as we are in the market. I hope to do that one at a time by interviewing great people like I have today, Matt Harrison who is a mortgage reverse mortgage professional. He's well he's located in North Carolina. Works across 22 states with movement mortgage. Matt, thank you for joining us today. Hey, thanks Bill. Really excited to be on with you today. So, how did you end up of all the world of loans that are done? How did you end up in the reverse mortgage space? You know, that's a great story and a great segue into you know why I'm doing this in the first place. So, a little bit about my past. I did real estate for 14 years. Got into lending back in 2015 and, I'd been doing it for, you know, a few years. And my dad pulled me aside during Thanksgiving and he said, "Matt, the house I want to sell my house." I said, "Dad, this is everything you want, right? It's a rambler. It's got 1,600 square feet. I mean, it's it fits all of your needs." He says, "No, it doesn't. It's not big enough. Again, my dad is a prototypical baby boomer, right? He's lived well, wants to continue to live well. He said, "It's not it's not big enough for me." And all of you when you come into town for Thanksgiving and Christmas and or for, you know, whatever, you've got to have hotels and it's crowded. I want a bigger house and I want a pool. I said, "All right, Dad, let's go." I said, "Here's your here's your options." at the point at that time, the home he was selling was around 300,000. The home he wanted to buy was 620,000. And so, you know, as a

2:08 Professional in the space and as a son that cares about my dad, I said, "All right, Dad, there's a few options available to you. Option number one is you sell your house and you get a traditional mortgage for the difference. It' be about $320,000 mortgage. And he didn't sound too excited about that proposition. The second option was to take money out of his retirement funds. He had it available. He could have taken that out completely and now he owns his home cash. And so we're kind of going through this and at the time I had this little memory in my mind. What about reverse mortgage? And so I said, "Dad, there might be another option. Let me go research it and I'll come back and let you know how it how it pans out. So, a week later, I call my dad and I'm like, "Dad, you're not going to believe this. You can buy this home for $620,000." And the down payment requirement that you'd have to bring in would be $380,000. The reverse mortgage proceeds or loan would take care of the rest. And you can buy this house and never have to make a principal or interest payment for the rest of your life. He said, "Wait a minute. Am I Well, what's the catch?

3:26 Like, I don't This is sounding too good to be true." I said, "No, that this how this works. It's an FHA insured loan. You still have to pay property taxes, insurance, maintain the property, keep it as your primary residence. But dad, you can buy this house for $380,000 of your own money, retain title to it, be able to have it, you can sell it if you want to down the road, you can stay in it for the rest of your life. And he just said, "Nat, why isn't everyone doing this?" I said, "Dad, I'm in three and I just learned about it." And so that started that first realm for me. I said, "There is a huge opportunity here." Yeah. That no one knows about. Yeah. And if your goal is to buy a home for cash, in essence, you could buy that same home for about 60%, you know, depending on your age, 70, you know, 70%. But you get a huge discount or I say reduction in the purchase price if you take the reverse mortgage, which is a mortgage, you're not getting that money, but it also has no payment as you say. And so for somebody's looking to buy out all cash for the purpose of living the mortgage payment, it's a great tool to extend your buying power. And you're looking at an area, well, I can't really afford the house I want is another 20%. Well, here's a chance where you can borrow 30 40% depending again your age and specifics and you can get that nicer house and not have to pay for it. And if you don't, you know, and you're not.

4:54 Here's the other concern though that I think all the program has eliminated because the common refrain is, well, yeah, but now you're eating in your equity, but in some ways you are, in some ways you aren't. Explain how that how the equity is really protected in that scenario. Yeah. So, I mean, it's really easy math on this, you know, you've got a loan balance and that loan balance is subject to an interest rate. Now, the great thing about a reverse mortgage is you don't have to make a principal or interest payment unless you choose to. But if you don't make a payment, here's your value, okay? And here's your loan balance. The loan balance is increasing through time if you don't make any payments. But the average appreciation rate and in most states we use about a 4% number is generally outpacing the loan balance that's increasing. % on the whole value of the property whereas the loan balance is only increasing on the smaller 30 or 40% of the balance which is the loan. So even if it goes at a higher rate say 7% 7% of 40% 2.8%. But the value of the house went up 4%. So you're still going to be building equity on an average scenario. Yeah. I mean let's just use a really easy math problem. Let's say that it's a million-doll property and it's a $500,000 reverse mortgage balance. And I'm going to throw in that the interest rate is 7%. All right? So simple interest 7% on $500,000. That's a $35,000 interest that has built on that loan. Right? But if we go with a 4% appreciation rate on a million, it grew by 40,000. Right? So we grew by 40,000 in the value. The loan balance went up by 35,000. It was actually a $5,000 net increase in equity in that given year.

6:46 And so this is why the, you know, when the program changed years ago, several times, but primarily a little over 10 years ago, the lower loan to values kind of force protecting equity. I mean, there was a time you could borrow, I think even 80% of the value of the property. And obviously if the house went down in value and the mortgage value went up, there at some point would be a lack of equity. But here it's kind of built in that not only is your equity there again, it's not your equity that you're borrowing anyhow, it's a loan, but the equity of the house should outgrow the mortgage. And then the other option is Matt, you still ch could choose to make the payment if you wanted to. Meaning if you're getting it paying cash because it'll be tight, but it turns out you have more money from your investments or you sell something or you have a job on the side, you can choose to one month make a payment, not make a payment, make a lump sum payment. You still have the flexibility to do that. Correct. Oh, absolutely. And here's the benefit of making a payment every once in a while on a reverse. With a typical normal traditional mortgage, a you have to make your payment every single month. Pay to stay is what they say. So, if you don't make your payment, pretty quickly that home's going to go on foreclosure. But once you make the payment, you can't take it back. If you don't believe me, try calling your loan serer up today and say, "Hey, I've been really good at making my payments over the last 10 years. I want to go to Paris. Can I take some of that money back?" Yeah. They're going to say, "No." Right? But with a reverse mortgage, it's very different. So, if you have a variable rate reverse mortgage that's open-ended, so you have a line of credit option, if you make a payment, now remember, every statement you ever get in the mail is going to say your payment obligation is zero. But if you make a payment, three things happen. First, that payment's going to lower down your loan balance by whatever you just paid.

8:40 Second, dollar for dollar, that payment is going to go into a line of credit where it's liquid and growing for you. And by the way, growing at the same interest rate that your loan balance is. Third, you probably paid some interest. And anytime that you pay interest on a mortgage, you're going to get a wonderful 1098 at the end of the year. Now, this becomes really critical with my high net worth individuals because the way that they plan on doing this is let's say that you have a loan balance within the reverse. And let's say that let's just go back to our example. A million-doll property, $500,000 loan balance. That loan balance, if it's increasing at 7% per year, is growing by about $35,000. Well, the simple math is within about three years, three to four years, you would have grown about $100,000 of interest in that in that reverse mortgage. Now, watch how cool this is. What happens if you have a retirement account, something that's taxable? You're going to, you know, let's say that you took out $100,000 from that retirement account and you get a 1099 for that amount that you drew out in that year, right? You'd have to pay taxes on that. But what happens if you take that $100,000 and you make a one-time payment on your reverse mortgage? Well, your loan balance just dropped by 100,000. Your line of credit just increased by a h 100,000 and it's fully accessible and liquid to you and it's growing and you just paid about $100,000 of mortgage interest. That's what we call stacking deductions.

10:22 And some years you'll use it, some years you might not. And I think that's thing gives you some extra flexibility. If you have a financial planner who's really putting together a strategy for you, this is where you can really fine-tune these. So now this is obviously the higherend scale of net worth individuals using this program and I think it's fascinating because there's a stigma this program that it's written for people who can't otherwise afford a house and there is some truth to it that was I think part of the original motivation was older seniors who lost their income their social security didn't cut it they had equity they didn't want to sell the house they couldn't refinance but today this program is so sophisticated that you can use the line of credit, pull money out when you want to for investments, pay it back off. You can stack your payment interest so that you can put the interest in the year that you want based on your taxable situation. All these are op options that even a high net worth person would tremendously benefit from. Absolutely. I mean, this is this is not the olden days where you know what, we've lost all of our money, right? We're going to lose the house because we can't even pay property taxes on it anymore. Now we have to draw in the equity position of our house. That was initially how it was designed to function is let's help those people that have planned really poorly for retirement. We will help them survive it. But now you have industry professionals in the financial planning space like Dr. Wayne FA, Dr. Barry Saxs that have done the simulations that say, "Okay, this is what your retirement plan looks like without a reverse.

12:00 This is what your retirement plan looks like with a reverse. And now you've got your high net worth individuals, those that might be on the fence saying, you know what, I'm okay. I'm going to survive retirement just fine. But is there a more efficient way to use money and cash flow in retirement? And a lot of us completely ignore the home equity bucket in that equation, which by the way, I think we're about $15 trillion being held right now in seniors home equity in the United States. It's a massive number. It is bigger than any other investment anywhere by far, but it's a it's a sacred amount of money that a lot of people look at their sacred cow, right? This is our house. We don't want to touch that. We don't want to lose it. But used in the right way, a reverse mortgage can potentially greatly enhance the sustainability of your retirement. Let's talk a bit. I know there's a program where you can set aside money for tax insurance. Now, obviously with a line of credit, you can draw on that to make those payments, but is there a way that you can impound the taxes insurance automatically? So, that's included as well. Is that an option on all the programs, some of the programs or a special feature you have to you have to invoke? Yeah. No, that's a great question. So, the program you're talking about is the acronym is LISA stands for life expectancy set aside. And what a LISA does is it will take it's a prefunded account. It's either preunded from the line of credit or it's preunded by the borrowers that goes into a separate account where it's growing and money gets withdrawn from that to pay for taxes and insurance for the client for sometimes decades in the future until it runs out. Right? And it's actually a very smart plan for our seniors because if you think about it, if you don't have to have a monthly principal or interest payment and your taxes and your insurance are also

14:04 Covered, your net payment on your home is zero. You know, unless you've got an HOA fee that happens to be there. So, really, it's just utilities. You know, I am 100% a firm believer of two things. Number one, if you have a home that's paid for free and clear in retirement, you should look at opening it up with a reverse mortgage. If you're over 62, it's an absolute no-brainer. Everybody, anybody has a free and clear just to protect the asset because I'm in West Los Angeles. We have people who I have clients who had a house was worth $2 million and they moved mom out to put her into a facility and then they were they had these idiot Realtors® that told them you should spend time staging the property and getting it ready and don't sell it for a few months till after the Super Bowl. It burned down and they have no this paid off free and clear. They have no mortgage to pay but they have no access to the equity until they resolve with the insurance. I have other people I know who had a reverse mortgage who wrote a check for a $200 house maybe $400 $500,000. It's not all of it. It's not good news the house burned down, but at least they have money to either buy a property or down payment for property or whatever living expenses while they fight with insurance company to get their settlement. So, at a minimum, just protect your equity. You should have that if your house is free and clear the line of credit so you can access it.

15:28 It's a it's a small cost of insurance to ensure like you say your most valuable prized possession for most people is the equity in their home. Yeah. And you hit California. I mean that is a perfect example. You know people that had their homes that burned down that had a line of credit with a reverse mortgage. They still have 100% access to that line of credit and it continues to grow for them. Yeah. So I mean the in between on okay do we have to be in an apartment for a while or another house you know whatever it happens to be there is still money that's there and available anyone that had a home equity line of credit traditionally or a cash out refinance that they don't have access to those funds you know once their house burns down it's like sorry the asset doesn't exist anymore but because this is an FHA insured loan it's a nonreourse loan Right? That's what provides that protection, you know, so that, you know, if for some reason the value of the home were to tank or it's no longer there anymore, this is still a non-reourse loan. It still allows the borrower access to those funds. Right. Right. It's a powerful tool and I think that, you know, we could talk about all the scenarios, but I just urge anybody here who fits in any of those. If you're professional, find talk to Matt or find somebody else that can walk you through those so you can offer this to your customers. And if you're a homeowner and your home is owned free and clear or you're looking to buy a house for cash, stop. Check out the reverse mortgage as an option, as a tool to extend what you're trying to do. It's a powerful tool, definitely worthy of your attention. You know, Matt, one of the things I noticed, and actually I know I know the answer. I'm going to ask the question. Okay, I don't. Your title is retirement mortgage professional and you're at movement mortgage. Now, I know as a Realtor® when I talk to a mortgage professional, if I ask a hundred, do you do reverse mortgages? 99 will say yes.

17:23 And 98 of them have never done one or done one in the last three years. But I know that you're in a different situation given the way your company has organized reverse mortgage professionals like yourself. Talk a little bit about what it means and how your business works maybe differently than other companies. Yeah, that's a great distinction. So one of the reasons why I came over to movement initially was the fact that movement has a dedicated group that dedicated team that's the only thing they do is reverse mortgages and so from the processing underwriting everything it is all done quickly and efficiently and we have a company that truly believes in the program and that is not always said for every mortgage company out there. In fact, there are many mortgage companies and banks that don't really do reverse mortgages at all. Right? You know, some may dip their toes in it a little bit, but this is a I mean, this would be akin to a physician that's a general practitioner. You know, someone asking say, "Hey, can you do brain surgery?" Well, yeah, I'm an MD. I could probably like tinker around in there a little bit, but I'm probably not going to be the best. You know, obviously, you wouldn't go with that physician. You're going to go with a specialist, right, that has studied and you know that's their focus. You know, for myself and the other retirement mortgage professionals with Movement Mortgage who cover all 50 states, reverse is all we do. It's all we're allowed to do. I can't, you know, turn around and get into a forward loan. To be honest with you, I haven't done one in so many years. I wouldn't know how to do them anyway as far as the software. But we love helping seniors, financial planners, estate planning attorneys, divorce attorneys, CPAs, real estate agents, and clients understand how this program can work and how it can really shape the retirement of people in the United States and make it so that they have potentially a better retirement. You

19:28 Know, as a real estate broker in California, I also at one point had a an NMLS license. I'm legally allowed to do mortgages and get paid a commission for them. Many of my competitors and colleagues do. But you know it is so much to keep up with changes in real estate sales and in my case in particular probate that you know number one I can't be great at both and number two is a it's a struggle to keep up with the one I'm in. And so I see originators like you and I know the guideline changes and the lender changes and procedure changes and mergers and acquisitions and this and that. And when an originator tells me they can do reverse mortgage and an FHA loan and a VA loan and I say I throw my penalty flag and say, "I'm sorry, I'm a smart guy. I can't do all that. I don't know how you even imagine you can do all that." And so I really admire I know that some companies look at the funneling of business as a negative. And I can imagine why season originators who do both well enough for them might not like it. But as a consumer of the service and as a professional business, I only want to work with the best the best. What I've learned in real estate is the best are so much more valuable than the really good or above average that they're the ones worth fighting for. And that's why I've done this podcast and that's why I'm really glad to chat a little bit with you, Max. I know you're one of the best in your business. I know you're with one of the finest companies that takes their reputation very seriously.

21:02 Now, another part though with Movement Mortgage is that your company prides itself on being an impact lender and I don't want to make it a commercial about Movement, but I really do admire that they walk this walk. Talk a little bit about being an impact lender and what that means to you as part of Movement Mortgage. Yeah, this is this was amazing to me to be honest with you. When I when I went to their headquarters, you know, I was being recruited and I went out and every other company that I've ever worked for, every company has always been all about the raw. This is why we're so amazing. This is what we do. This is how much money you can make. So on and so forth. The very first thing that Movement Mortgage did with me when I arrived is they loaded me onto a bus along with another you know 30 others and they drove us to a charter school and this is a very special charter school. It was built and funded by Movement Mortgage and it is put in they put these in underserved areas, you know, throughout the country and it is staffed and they pay for the wages for the educators there. They pay for, you know, executive chefs to curate the meals for the kids. Wow. They do all of these different things and I learned very quickly where the heart of this company is. And they give 40 to 50% of all of the profits of Movement Mortgage, whether it's reverse or not, go towards charitable contributions like this. So, building charter schools, we have vision trips that we can go to different areas in the world and do humanitarian work. And so I mean it is if you if you want a company or want to be behind a company that really gives back to the community, I haven't been able to find any other company that does it to this level.

23:03 You know, every company has this little social movement. I'm with eXp Realty. We have a thing they do and it's because they came from Keller Williams. They had a thing they do. Movement mortgage walks this walk like nobody else. And I've been around a long time. I see a lot of companies. It starts from the top. It starts from Casey who is your founder and I'm not sure his exact title, chairman or whatever, big mucky muck, a former NFL football player and heartthrob by the way. I have my wife saw a picture of him and can't get her out him out of her mind. But they've walked this walk from the very beginning and as the company's grown, it's had a tremendous impact. And so again, I just want everybody to know this company takes its reputation very seriously. Its impact on the community very seriously and in the reverse mortgage field. They've really hired some top executives for reverse mortgages and they then have restricted agents to getting the best professionals to service you. So man, I really appreciate your time today. For somebody who wants to get a hold of you and talk about either as a buyer, as a borrower buying a house or refinancing or as a professional wanting to establish relationship with you, u we have your contact information on the screen. Is that the best way to get a hold of you? It is. Yeah. So website reversehome.com. You can reach me there that has all my information. You know, and again, for us, we are 100% about educating and letting people know, hey, this is a pathway that you're currently on. This is the way you're going. And is there a different pathway that could provide you more safety and security in retirement, and we just love helping people. I know you do, Matt. It comes across. Thank you. It's always great when I talk to you. Thank you so much for your help today. Again, reversermortgage.com is a website. Matt Harrison from Movement Mortgage. Contact information down below. Matt, thanks so much. Look forward to talking again soon. Thank you. Appreciate you. And for the rest of you, this is the Reverse Mortgage Podcast. We get together every week with leading professionals, the best of the best to learn how they do business, how they can help you, whether you're a consumer looking to borrow money, or should, or you own a house for cash, you should get a line of credit, you're buying a house for cash, you should get a reverse mortgage, line of credit at a minimum. He can talk to

25:06 You about that if you're looking to work with them a professional basis as well. Feel free to talk to watch our podcast, meet people, learn, be better. If you know somebody who' be a great guest, feel free to pass on the information. Please like this, put comments below. What should we talk about? Subscribe as always on Bill Gross, Bill Gross Probate and social media. As always, make today your best day ever. Thank you so much.