An Oregon-based reverse mortgage brokerage has decided to mark a milestone of customer savings through a $1,000 donation to a local senior center, commemorating the savings it has provided to its reverse mortgage customers in terms of the amount of forward mortgage payments they have been able to forego as a result of getting a reverse mortgage while also aiming to give back to the local community the business operates in.
The move is also being made in an effort to demonstrate the consultative approach that the reverse mortgage business takes with its senior clients, in the hope of showing local community members the differences between the actions of a reverse mortgage industry participant when compared with the longstanding reputational concerns that some people maintain about the reverse mortgage product category.
Northwest Reverse Mortgage
Clackamas, Ore.-based Northwest Reverse Mortgage has only been in operation for the past couple of years, but its president and owner Jeff Foody has been involved in the reverse mortgage industry since 2002. Prior to starting his own reverse mortgage brokerage, Foody had helped to establish a reverse mortgage operation inside a local bank. After staying there for seven years, Foody saw that there was a limited amount of bandwidth the organization made available to the reverse side when compared to the traditional, forward mortgage side.
“There’s really only so much bandwidth that they’re really willing to give the reverse division,” Foody told RMD in an interview. “So, I broke off to create my own reverse mortgage-only brokerage about two years ago. Our idea is that we are set up with all of the major investors to be able to offer to clients every option: we want to be able to sell all the jumbos, we want to be able to sell whatever else there is. If a client can do a reverse mortgage, we want to make sure that we have the ability to do it for them.”
As of right now the brokerage is licensed in Oregon, Washington and Idaho and expects to be approved to operate in California soon. Instead of going with an approach defined by either the hyper-local focus or having a big call center operation, Foody describes a desire to fit comfortably in the middle between those two kinds of scales. While he aims to hire some people who may not have reverse mortgage experience, that doesn’t necessarily mean he’s interested in hiring people on the forward mortgage side, he says.
“[Forward loan officers] are just used to a different type of selling,” Foody says. “They’re used to market rate changes, heavy pressure, creating a false sense of urgency to be able to help people move along quickly, and I don’t think that has ever worked in this atmosphere. I’m looking for people that have a history of information sales. I want them to inform and to educate [across] these life cycles for these clients.”
Some of his clients, Foody says, began the process of looking into a reverse mortgage as long as 18 months ago, while having yet to submit a formal application.
“That’s commonplace in the reverse mortgage industry,” he says. “Forward mortgage people would have stopped calling on the sixth or seventh phone call, at least that’s been my experience.”
While he acknowledges that he is generalizing, he also says that it helps to have a clear idea of hiring people who demonstrate an ability to be involved with clients for the proverbial long haul, he says.
A milestone of forward mortgage payment savings
When it comes to the recent milestone that Foody’s company reached, internal metrics demonstrated that the company had reached the threshold of saving its clients an estimated $1 million in forward mortgage payments. This is because of the data they absorb when taking on a new client, and the company’s desire to fully grasp why it’s involved in the reverse mortgage business, Foody says.
“We like to track how much money we’re saving clients,” Foody tells RMD. “For every client that we do a traditional reverse mortgage for that had a previously-existing mortgage payment, we track what their mortgage payment was. We have an Excel spreadsheet for every loan that we close, we track what they would have been making in mortgage payments. So, it may have been a year ago, and if they had $1,000 per month mortgage payment, then after a year, we would have saved them $12,000 in mortgage payments.”
For all the company’s closed loans, the company tracks what their monthly mortgage payments would have been, and the figures are updated monthly. By that metric, the company reached a milestone it wanted to mark in some way.
“Last month [we hit the point] where we’ve saved [our clients] $1 million in monthly mortgage payments,” he explains. “There are three different indicators we like to track: we like to track money saved, we like to track our purchases and we like to track the amount of foreclosures that we save people from. Those are just our key indicators [that helps] keep our focus on what matters to us. And I know a lot of people do like closed loans and loan volume, but we don’t want to get away from why we’re really doing what we’re doing, which is to save people from having to make those mortgage payments, new purchases or foreclosures.”
Giving back
When aiming to determine the best way to mark the milestone, early discussions revolved around the creation of some kind of award to internally recognize the work of the company’s employees, but the discussion eventually pivoted toward a donation that could be meaningful for seniors in the local community, Foody says.
When brainstorming, the company’s business development specialist brought up the idea of doing something involving the community of Gresham, Ore. due to her involvement with the town’s chamber of commerce, which eventually turned into more serious discussions surrounding the idea of making a tangible impact on its local senior community.
“While we do have the advantage of low interest rates, we want to be an impactful business that’s going to be here for a very long time in our local communities,” Foody explains. “And so, we want to make sure that while we’re benefiting from the low interest rates and the amount of business that we have coming in, we recognize that there are people out there that aren’t as fortunate [who could use some] help. The Gresham Senior Center, in particular because of [our Business Development Specialist] Breazy Wirth’s relationship in the Gresham Chamber of Commerce and those relationships, she was aware of their particular needs.”
That’s what led Northwest Reverse Mortgage to make a $1,000 donation to the Gresham Senior Center as a way to mark the milestone of saving its customers an estimated $1 million in forward mortgage payments, but Foody is quick to say that he hopes they can make similar donations to other local senior centers in need of help.
“We’d be happy to help and find other opportunities to be able to serve some of those other senior centers that are in need, too,” he says. “This was just the one center because we had a relationship with them, but by all means that doesn’t mean that they were the only ones that needed it. I’m sure they all do.”
The importance of good industry visibility, social responsibility
It also speaks to the way that Foody wants the reverse mortgage industry to be perceived by others in the community, since it should come as no surprise to reverse mortgage industry participants that there are some in communities around the country who look to reverse mortgage companies with skepticism.
“I know that we’re a small industry, and it always seems to have been a small industry,” he says. “But that doesn’t necessarily mean that we can’t make an impact. My expectation is that reverse mortgages will become a lot more mainstream within the next five-to-seven years as people start to become more educated and more aware of the safeties that are in place for this program. I just hope that as the small industry grows, we don’t lose that sense of trying to do the right thing and trying to protect these clients.”
Keeping in mind the specialty represented by the reverse mortgage product category is key to differentiating it from more traditional loan options, Foody says.
“My fear is that these loans will become more like traditional mortgages, and they kind of get swept under the rug and treated the same as every other type of loan,” he says. “I don’t ever want to see that happen. I want to see the protections and the safeguards, and also the social responsibility that we feel is [inseparable from] these loans. I don’t ever want to see that change.”
