Become a Reverse Mortgage Broker

One of the newest forms of mortgage modification processes is turning a classic mortgage into a reverse mortgage. This kind of financial planning tool allows those with equity in a home or other property to start taking that equity out in the form of available funds. Unlike a traditional mortgage that allows a homeowner to buy a home by making payments on the loan over time, a reverse mortgage is a loan that can provide a homeowner with funds against the value of his or her property.These mortgages are for older homeowners, and allow them to defer payments until they die, sell, or move out of the home. Since many retirement age homeowners are interested in reverse mortgages, becoming a reverse mortgage broker may be a good career choice for you.

Steps

Becoming a Mortgage Broker

1. Get the right education. To be a mortgage broker, you will need to have a strong background in finance, real estate transactions and law, as well as the ability to communicate well both orally and in writing. Not only do you need to understand the way mortgage rates are set and change, but you also need to be able to explain that to your clients. If you can attend a college with a business program, that could certainly be helpful, but as long as you have the right background, you should be able to get started on the process.
   • Beyond schooling, you will also need some background in sales and marketing, and probably banking as well. In particular, you will need to understand credit reporting and credit-worthiness. These are important issues you will need to navigate your clients through as a broker. You can get this information through school or by working with banking and lending institutions.
2. Learn your state’s rules. Every state has its own rule and requirements for licensing, so you’ll need to find out what is necessary for the state you want to work in. These licenses are usually covered by the state’s commerce office, or a similar department. Differences in state laws include whether you need a license, what kind of mortgages you can issue, and if you are required to have a physical office in the state.
   • The Nationwide Multistate Licensing System & Registry (NLMS) system has a list of each state’s licensing requirements.[1]
3. Apply to NLMS. The NLMS helps to govern the regulations and licensing for mortgage brokers nationwide, and joining it will get you into the national system. Earning certification from the NLMS is a necessity for becoming a mortgage broker. There are a series of steps you will need to take in order to join, each of which will also include a shipping or registration fee.
   • You will need to undergo a background check, which includes submitting official fingerprints. If you have fingerprints on file with NLMS that are less than 3 years old, you will not need to be re-fingerprinted. You should know the results of your background check within 48 hours.
   • Take required classes. Through the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), the federal government requires 20 hours of approved education that includes 3 hours on Federal laws and regulations, 3 hours of ethics, 2 hours of training for standards, and 12 additional hours on mortgage origination.
   • Pass the NLMS exams. The licensing exams from the NLMS are full-day tests, covering both federal and state regulations. You will need a pencil and calculator to work with, and perhaps other items depending on your state's requirements. You need a 75% score to pass the exams, and you should get the results within one to two weeks after taking the tests.
4. Apply for a state license. Once you are certified by NLMS, you need to get a license from the state you intend to work in. Each state will have a different office you need to contact for the license. Some states, such as California, have multiple offices you can register with. Like NLMS registration, these licenses will probably require a background check, as well as proof of citizenship, insurance, a surety bond, and addition education requirements beyond those listed in the SAFE Act.
5. Maintain your license. You will need to annually renew your broker license. Other requirements and fees vary by state, though you can do many of them through the NLMS. Make sure you are able to access your online account through NLMS, which will make the process quicker. As of November 1, you can request renewal through the system. Once you make the request, your state agency will be notified, review your request, and communicate any issues they find. At this point, your state is responsible for your renewal application
   • Businesses can request licenses on behalf of their individual licensees. If you are working for another company before starting your own, check with your company to see if they are doing it for you.

Working With Reverse Mortgages

1. Research state requirements. Every state has its own rules for reverse mortgage brokers, and some may include specific background checks or other requirements. In North Carolina, for example, any lender that makes a reverse mortgage loan needs to be certified by the state’s Commissioner of Banks. You must fill out the appropriate forms, take out a $100,000 Surety Bond, and pay a $500 filing fee.
   • If you receive state certification, make sure to keep handy. The federal government warns seniors to keep an eye out for dishonest lenders who will try to scam them, or force them into purchasing unnecessary products they can’t afford. It will help ease your clients’ minds, and establish your credibility, when you can easily point to your licensing credentials.
2. Get training in reverse mortgages. As these are specific types of mortgages, you will need specific training in order to sell reverse mortgages. The length and requirements of each course will depend greatly on your state, though most of the content is managed by the Federal Housing Administration (FHA).
   • In these courses, you will learn about the requirements for making a reverse mortgage loan, as well as how to talk to your potential customers.
   • You can find a number of programs through training companies advertising in newspapers and online, as well as through local institutions like community colleges. You will be able to get a good education from many of them. Just make sure to check the company’s background to make sure they are reputable. Being a member of a group like the Better Business Bureau is a good sign.
   • Some companies will provide your training, and guarantee employment after you finish. These are probably your best option, as they will have connections to lenders and prior expertise.
   • The National Reverse Mortgage Lenders Association (NRMLA) offers additional continuing education credits at their annual meeting. The 8 hours of coursework covers themes like regulatory changes, understanding client needs, consumer protection, and financial risk assessment.
3. Join the NRMLA. The National Reverse Mortgage Lenders Association is a professional organization that tries to set ethical and professional guidelines for reverse mortgage lending. Becoming a Certified Reverse Mortgage Professional (CRMP) gives you an extra credential to reassure potential clients of your trustworthiness and professionalism. To become a CRMP, you must follow several steps.
   • You must have 3 years of experience in reverse mortgage loans, submit a letter of recommendation from a senior management figure, complete a NRMLA course on ethics, a course on preventing, detecting, and reporting elder abuse, and 12 credits of continuing education.
   • Apply through the NRMLA website, including the application form and a $250 application and testing fee.
   • Once your application is approved, you will be able to sit for the exam. The exam consists of 120 multiple-choice questions that you will have 2 hours to finish. You will be informed of whether or not you pass the exam after finishing. You may retake the exam after failing, after a six month wait and a $195 reexamination fee.
   • Once you pass the exam, you must then pass a background check, after which you will pay a $175 fee to receive your certification.
   • To keep your status, you must pay a $175 annual fee for renewal.
4. Find a job. While it can be helpful to have a background in mortgages, the most important thing is to demonstrate a willingness to work with the elderly, or other high-need groups. Generally, you will already have experience in mortgages before becoming licensed for reverse mortgages, so you’ll need a connection to the financial services industry already.
   • Age is generally not a restriction when it comes to working with reverse mortgages. While many brokers are seniors themselves, someone in their 30s with the right communication and empathy skills can be quite successful. Being patient and able to relate to your clients is more important than your experience.
   • This is currently considered a growth field, as more Americans are reaching the age where they would be eligible for a reverse mortgage. Many lending institutions are beginning to offer reverse mortgages, and will need the brokers to do it. Even if you do not get hired right away, openings will continue to appear if you have the proper attitude and skill set.
   • Not all lending institutions can issue reverse mortgages. In Massachusetts, for example, you must work with approved institutions for reverse mortgages. Other financial institutions in the state will not be able to issue them, so you’ll need to work for someone with the state’s approval.
5. Have the right attitude. As a reverse mortgage broker, you will need to be patient. Many clients will approach you about a reverse mortgage only looking for more information. They won’t be ready to apply or sign for anything right away. They may even want to wait six months, a year, or even longer, before committing. You will be working with older clients who will not respond well to pressure for a sale.
   • Some of your clients may be homebound or keep unusual hours. In addition to patience, you will also need to have the flexibility to visit their homes, and take questions in evenings or weekends.
   • Another important part of working with reverse mortgages is the willingness to educate your clients. There are many misconceptions and misinformation about reverse mortgages out there, and you will need to cut through that to reach your clients and help them understand why a reverse mortgage is (or isn’t) the right decision for them.
6. Build relationships with counselors. In order to receive a reverse mortgage, potential clients must go through counseling approved by the US Department of Housing and Urban Development. These services help homeowners understand the pros and cons of a reverse mortgage, and make sure they are in a good position to pay.
   • If someone comes to you for a reverse mortgage, you are required to direct them to a counselor before proceeding. Make sure you know the approved counselors in your area so you can direct clients to them. It’s good to know the best ones so that your clients can get the best advice possible.
7. Learn about the people who want reverse mortgages. Only certain people are allowed to apply for reverse mortgages, and for some, a reverse mortgage is not the right decision. Make sure you know who qualifies for a reverse mortgage so you don’t waste your time working with someone who isn’t eligible. In addition, by understanding why someone would want a reverse mortgage, you can better insure that you will give the best service.
   • You can take out a reverse mortgage on single-family homes, 2-4 unit properties, manufactured homes (built after June 1976), condominiums, and townhouses. You cannot take one out on a co-op.
   • To take a reverse mortgage, each property owner must be at least 62 years old, and own your home. Lenders will assess the borrower to make sure he has the financial ability to keep paying things like property taxes and homeowners insurance, and they can force certain set asides to make sure these charges are paid. This group of people tends to be on a fixed income, usually drawing from a retirement fund and Social Security. As a broker, you will want to be familiar with your client’s finances to make sure they can meet these obligations.
   • If your client intends to leave the home in 2 to 3 years, or wants to leave the home to children, a reverse mortgage is probably not a good decision. It will be expensive, and could end up seeing a lien put on the home after the owner’s death.
8. Start your own brokerage. Many brokers and loan officers don’t move out of their positions, and there isn’t much room for advancement. If you are looking to take another step in your career, you may consider starting your own brokerage. Make sure reverse mortgages are part of your planned niche, get the necessary loans, and get your business registered with state and local government offices.

Warnings

• Sadly, there are people out there who will try to take advantage of older homeowners in reverse mortgaging scams. To protect your profession and potential clients, be sure to report unethical practices to the Department of Housing and Urban Development, the Federal Trade Commission, as well as your state’s attorney general and bank regulatory office.

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