post by Sam Collins

When is the last you time you wrote a letter?  I’m not talking about a letter to  your sweetheart, best friend, or Mom.   I’m talking about a letter to a prospect who may not have heard from you for a while.

I use letters a lot in my follow up.  My letters used to be long, but now I have taken a different approach.  My letters are rarely more than a one page long.  I always make sure my letter is personalized.  For example it doesn’t start with, Dear homeowner, it’s Dear Ms. Smith.   

Next, I always want to try to make it interesting.  Usually working in one or two benefits of both the reverse mortgage and next, something about me or my company.  I’m not flashy, but always positive and upbeat.  I always shoot for a response of some sort and give several options; phone, email, 800#, recorded message, web site, blog.

Next, I always have a PS and include some resource for them to checkout.  Last by not least, I include my business card and a free report or white paper that I think my senior prospect would be interested in. 

Remember the  WIIFM.  What’s In It For Me.  Everything you say and do should be focused on this goals when you communicate both with a letter and in your conversation.

Next, try this.  Take a look at your data base and see who might need a letter.  If you only did one a day, what’s it going to cost?  Pennies! And pennies could be worth thousands!

Remember, keep moving foward to stay ahead in reverse.

post by Sam Collins

Today there were many comments on the Reverse Mortgage Daily relevant to its posted article about “Fannie Mae Pricing Brings Higher Margins for Reverse Mortgages.”    I must admit I was very impressed with the comments, thoughts, and concerns that many expressed.   The passion this industry has is probably second to none and for that we can all be grateful.  Passion stirs action and  results in change.

I would like to put on my practical hat and delve into what I consider the real meat of the situation.  Investors are reluctant to purchase reverse mortgage securities because of their expected return on investment.  When you consider the 1 year Treasury is at an all time low for adjustable HECM’s,  then it is there where the rubber meets the road.   Bear with me, if you had say  $100 million to invest what do you think your risk is worth, say 3%?   I would think you might want more like a minimum of 5% return.  So with the 1 year Treasury being so low, in comes the higher margins to induce investors to buy in.    But, here is the problem.  What happens when the 1 year Treasury begins to rise and the current or higher margins are still around?  Yes,  many senior homeowners may get a lot less cash and at worst case scenario, lose their homes.    

I am not sure who determined  the HECM adjustable was based on the  1 year Treasury.  What if it was the 5 year Treasury?   This would automatically induce  an investor who is going to get a higher return.  Margins could flatten and not continue their current drastic rise.   Just a thought? 

There were a lot of good ideas and my hats are to all who contributed.    The best course however, is to write your Senator and Congressman and tell them about this situation.  Better yet, add a phone call to their office.

Overall we have another one of those Unintended consequences.  Unfortunately, the ones we need to protect the most are the one who will be hurt.  

Remember, keep moving forward to stay ahead in reverse.

post by Sam Collins

Today more than ever it is important to advertise and evaluate your market.  With yields practically disapearing the cost of marketing is not going to go away.  So what do you do?

Take advantage of the opportunity! Economic downturns are Darwinian events in the marketplace. The weak perish and the strong and agile survive, even thrive. During downturns, some companies disappear or are swallowed up by rivals. Others emerge stronger than ever. There are basic principles which apply during all downturns. How those principles are dealt with determine which companies will eat and which ones will be eaten. Cut product quality or service? Remember Schlitz? Just thirty years ago The Beer That Made Milwaukee Famous was America’s second best selling brew. Someone decided to trim costs by switching to high temperature fermentation. Customers wouldn’t notice, right?  Wrong. Six years later the company was out of business.

Cut advertising? When Netflix began making serious inroads into Blockbuster’s customer base in 2005, Blockbuster cut its $154.2 million advertising budget to $44.7 million. No surprise that Netflix grew from 4.2 million subscribers then to 7.1 million now.  How’d the ad cut work for Blockbuster? In 2007, they closed 500 stores and saw a $33.4 million profit turn into a $125 million loss through the third quarter.

An aggressive approach will pay some dividends early but downthe road rewards are even greater. Companies that gain share during down turns historically keep that increased share when the economy bounces back.  Each share point gained during the recession is worth incrementally more as the market eventually recovers. A McGraw Hill study showed that four years after a downturn, companies that maintained or increased marketing communications during the economic slowdown typically experienced 14 times more growth than companies that cut back. As far as today’s overall gloomy consumer confidence, there is one thing that is emerging. Even though consumers are cutting back, they’re not doing so entirely.  Consumers are finding ways to maintain their quality of life, but they are tightening their belts for non-essentials.

Is there Opportunity? Absolutely!  You should  consider  going all out in the media that produce quantifiable results, especially since their messages will be more prominent as competitors reduce spending. No matter how deep the recession is or how long it lasts, it’s the perfect opportunity to become aggressive and grab market share as competitors scale back their marketing efforts.

 Remember, keep moving forward to stay ahead in reverse.

Check out Secrets to Bloggin 101 course, Free Training 2:00PM ESt April 8, 2009.
https://www2.gotomeeting.com/register/537475231
Sam will review why it is important for reverse mortgage professionals to have their own Blog,   

Why should you consider having a blog for your reverse mortgage business?
You’ll learn:
1.  What is a blog?
2.  Why should I blog?
3.  How to Create a blog in less than 10 minutes.
4.  Resources to get started on your blog
5.  How to get ready for the  next generation of savvy internet  users…Boomers.