Business Innovators Radio - Interview with Kevin Guttman, Reverse Mortgage Specialist

Episode Date: February 21, 2024

It’s only natural that Kevin A. Guttman helps people with reverse mortgages. He’s been around real estate practically his whole life. His parents were realtors and investors in southern California. Kevin grew up tagging along with his dad to look at properties, and he learned early on what makes a good real estate investment.As he got older, Kevin and his brothers began fixing up properties for their father, and eventually Kevin began managing them.But before he began his own career in real estate, Kevin started on his life-long path of helping others. He spent years in the ministry and in the non-profit world. He traveled the country to raise money for projects in the developing world, helping people have clean water, medical clinics, schools, and enterprise loans to build businesses.Since 2004, Kevin and his team have helped hundreds of homeowners get mortgages, with a close rate 50% above the industry average.So why reverse mortgages? It’s all about helping people live the retirement lifestyle they deserve. Kevin says he’s met with so many seniors who are house-rich and cash-poor. They have no pension, they’re relying on Social Security, and many are working well past retirement age because they’re worried about their financial future. Kevin believes it’s his mission to inform and educate people, give them honest Reverse Mortgage In Denver answers and advice, and help them consider their options.On the home front, Kevin and his wife Sabrena have been married since 1988. They have five children and one grandchild. He’s proud of all of them, and he’s also proud that his customers like to tell him he treats them like family.Learn more: http://www.reversemortgagerevolution.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-kevin-guttman-reverse-mortgage-specialist

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. And welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us Kevin Gutman, who is a reverse mortgage specialist. Kevin, welcome to the program. Thank you, Mike. I'm glad to be here.

Hey, so I always love a unique type of approaches and people that specialized in one specific thing. So, you know, I want to hear more about reverse mortgages and how you got into that specialty. But first, give us a little bit of your background and story. And then how did you get into the industry as a whole? Yeah. So I'm originally from Southern California. I grew up right near Disneyland. My dad was a real estate and realtor and a real estate investor.

So we talked about real estate a lot in my home, which I loved. And when I started my career, I worked for a nonprofit. I used to travel around the country and meet with donors, raise money for people in the developing world to have clean water, medical clinics, schools, small business loans, et cetera. And it was extremely rewarding work, very satisfying. But I was traveling about half the time. And my wife and I have five children. So I just needed to be home more. So I left that in 2003, 2003. And 2003, we started flipping houses. She has a real estate background as well. And then ultimately, 2004, I got into the mortgage business. Yeah. Well, 2004, let's see here.

That was before the big economic crisis meltdown. So I'm sure that was some, you know, hovering times as you got rolling, huh? Yeah, it was amazing. The first few years were great. And then we had a couple tough years. And, you know, it's kind of an up and down business, I guess. So when you started in traditional mortgages, at what point did you start thinking I want to now really hyper-focus into reverse mortgages? Well, I got trained on reverse mortgages in 2007.

And there were some things about them. I just really wasn't comfortable with how the program was structured. And in 2015, the government fixed those things. It's an FHA loan for the most part. There's other products out there, but most of the market is FHA-backed. And so they corrected that, and I got retrained in 2015. And then 2020, 2021, 2022 was about 50-50, traditional mortgages, regular mortgages. And then in 2023, with the interest rates going up so much,

and inflation and seniors needing more money. Two-thirds of my business was reverse mortgage. One-third was traditional. And most of my business is by referral. So we'll see what 2024 holds, but last year it was mostly reverse mortgages. You know, I know that reverse mortgages typically are benefiting the older generation, but I know that there's benefits in younger, you know, more affluent-minded. So I'm going to get into some of that.

But it makes me also think that any wise prudent person, no matter your age should be very cautious and careful. And any newfangled product out there kind of makes you look sideways to go, really is this proven? So reverse mortgages, they've not, this is not new. They've been around for quite a while. How long have they been around?

Yeah, that's a great question. The very first reverse mortgage was taken out in 1961 in Maine. there was a widow who still had a mortgage. Her husband had passed away, and she couldn't afford to make the mortgage payment, which is actually very typical from people I meet. When one income goes away, it's harder to live and continue to pay a mortgage payment.

Long story short, she knew the local banker because her husband was a football coach, and the banker played football for the coach. He went to his bank. And I know this family and what if we suspend her mortgage payments? Well, she doesn't make any mortgage payments anymore. But we take payments out of her equity. And that's the very first reverse mortgage was born.

And then what a creative thinker. So that person was just trying to help someone, but yet was structuring an actual product that was creative then. And if you think about it logically, like you can just imagine that. conversation with the board, the banker was going, look, if we suspend it, we're not getting any money. We're actually getting our money down the road because our position is growing every month, quarter, whatever the case is, because when we give her a little bit of money, it's kind of making a bigger lien and a bigger lien and a bigger lien.

And she's happy with that because it relieves her, you know, cash flow problem. And we're happy with it because if and when the house sells or she passes away, we then have a bigger position. So what a neat, a creative approach that came out of necessity to help somebody. Yeah. Well, it is true. However, for 27 years from 61 to 88, it was kind of a wild west. There was several companies that had a version of a reverse mortgage. And honestly, Mike, there were some abuse. People would lose their homes, people would take advantage of, etc. And that's why they have a terrible reputation. However, In 1988, President Reagan and Congress passed the Home Equity Conversion Mortgage Bill, HECM, Hecum.

And in 1989, the very first reverse mortgage was taken out. And over the years, they've improved it and put in many safeguards, probably the safest loan anybody can get out there. And there's been over a million to people take these out. And it's designed for somebody that wants to remain at home and age in place, maintain their independence, live the lifestyle they've grown accustomed to or dreamed of, and not have a mandatory monthly mortgage payment. And in some cases, if there's enough equity, they can gain access to the equity. Maybe we can talk about the different uses at some point.

Yeah. You know, I want to kind of pause on that misconception concept a minute because I know that when you hear certain words, you know, your red flag goes up, like insurance, like reverse mortgage, like, you know, things like that where it's like you have this initial reaction like, oh, I know what that is and I want it or I don't want it. And I think that you're right. A lot of people think reverse mortgage is bad. But what you said there was with that HECM back in 88, that's when they started noticing here's some things we don't like about the reverse mortgage product. Let's make it better. And that was 1988. That was a minute or two ago. But yet that negative connotation. still is out there. Why do you think that is? You know, I think a couple of things.

One, the government's bad at marketing their products, as it were. Yeah. And then two, you know, when somebody gets something in their mind, it's hard to shift them off of it. So, like I'll give you a quick story. Dave Ramsey, he's on the radio and he's got lots of books and stuff. And by the way, we coordinated Financial Peace University at our church. So I'm not against Dave Ramsey. But he is not pro-reverse mortgages.

And he has a little clip out there on YouTube about how a 92-year-old man in Chicago's losing his home because he has a reverse mortgage. And so I just commented because you can make comments on the chat or the video. And I just made a comment. I said, well, isn't it true if somebody doesn't pay their property taxes, well, they have no mortgage. a mortgage or a reverse mortgage, they're going to get foreclosed on. It doesn't matter if they have a mortgage or not. If they don't pay their property taxes, the county is going to foreclose. It has nothing to do with the guy having a reverse mortgage.

So this is the kind of thing, though, that here you've got a pretty popular guy out there and Dave Ramsey who's misinformed and putting that information out there. Well, of course somebody's going to say, I don't want that. So I don't know how to answer that other than you have people that. are uninformed. So what are some of the misconceptions that were, that are out there that used to be happening with reverse mortgages, but now over the last few decades have been polished up and improved and now makes it one of the safest products out there.

What were some of those things? Good question. The number one myth we hear is they have to give up title to their home. That's not true. You retain title and ownership the whole time. It's just like a regular mortgage. there's a lien placed against the home. And when the last person moves out, the loan becomes due.

You have to get a pay off and pay off the lien, just like anything else. Correct. With a reverse mortgage, though, somebody has up to six months to sell or refinance the house. If they need more time, they can get two, three months extensions. So basically a year. Another one is, like I just mentioned, about how reverse mortgages cause foreclose. or whatever. The criteria, the responsibility the borrower has is it has to be their primary home. They have to maintain it. Pay the property taxes, homeowners insurance, and if there's HOA dues,

pay that on time, which most people do all that stuff anyway. As long as they do that, the term of the loan is 150 years. So in 2015, to specifically answer your question, some of the changes that were made, this used to be a loan prior to 2015. If you were old enough, 62 or older, Had enough equity at that point, it was 60%. You could borrow. Now it's more like 40% you can borrow because interest rates have gone up and the government has backed off how much they're willing to lend. Anyway, long story short, if you were old enough, had enough equity, you qualified.

Well, in 2015, because of stories like the 92-year-old gentleman in Chicago, the government said, you know, you should really prove you have enough income to pay for the carrying costs of the home. maintenance, property taxes, insurance, etc. So that was called financial assessment. So now people actually have to qualify. The good news is they don't have to qualify for a payment. They're only qualifying for the property charges.

So most people qualify with just their social security. So security, sure. Yeah. And then the other thing they did, and this is kind of silly, but prior to 2015, let's say there's a client, a borrower who was 62, but the spouse wasn't. We'll say it's a husband's 62, the wife wasn't. And then eventually, you know, they live there 10 years and the husband moves out or passes away.

So now the non-boring spouse, the wife who wasn't 62, she would have had to move out prior to 2015. So she's lived there all this time. And now because the borrower wasn't living in the house, the non-bore would have to move out. Well, they fixed that. So now the non-boring spouse has the same benefits, if you will, as the borrower did, except if there is a line of credit available, that's turned off until the spouse, the non-boring spouse, can go and maybe refinancing, and if they're over 62, then they can be on the loan, as it were.

So they've just really been listening and kind of trying to listen to the market and meet the markets needs. And those are two big changes that they've made to make the program safer. Third one would be they have to do mandatory phone counseling or in-person counseling. So you have to meet with a counselor for an hour. It's an independent third party. And they want to make sure that you understand how the program works. They want to make sure you have sound mind. They want to make sure all your questions are answered. Nobody's pressuring you to do this because sometimes salespeople can be pushy or even family members who might get in there and try to get a hold of mom and dad's money.

So there's, like I say, there's all these safeguards and protections now in place that really are beneficial for the client. And who does that counseling with them? There's a list of approved counselors that we give them. And they can pick any counselor on the list. So it's a third party. Or they can do it by phone. Yeah.

That's really another, that's a, you know, further aspect of that safeguard. which is if it was up to the lender, then I just checked the box. I told them, but did you? And did they understand it? But when it's a third party, they have no skin in the game. And they're just making sure the customer understands. And so that's another really good thing. Because if there is misconceptions and they go talk to that third party person,

they're getting all of their questions answered. Exactly. Here's another thing that's unique about a reverse mortgage. It's a non-recourse loan. So unlike a traditional mortgage where somebody's personally signing, they're liable to pay the note, with a reverse mortgage that's a non-recourse loan, what that means is the only recourse the lender has is against the home, not against the borrowers, not against their heirs, not against the estate. The only cure, as it were, to be made whole for the lender to be made whole is the sale or refinance of the house.

That is good. because if the market crashed and now there's equity issues or whatever, it's not like it's going to bleed the house and then their portfolio and then their kids and all that. So that's a really good distinction. So you talked a little bit about some of the ways that seniors are using reverse mortgages. What are some of those other than the one you mentioned, which is I can't pay my bills. So now this will help me pay my mortgage. Yeah, the three big uses of a reverse mortgage is, number one, eliminate the money. mandatory monthly principal and interest mortgage payment. So think about it, Mike. When somebody's on a fixed income in retirement, to eliminate that monthly bill each month,

the biggest bill you have, that's a game changer. So I think about a family I helped, Alan and Angel, and that was their situation. He had to stop working as he got sick. And she had been a stay-at-home mom, haven't worked a lot. And so really all they had was their social security. And so now they're paying the monthly mortgage payment. We free that up from them.

And it freed up over $1,000 a month. And so now they've got some breathing room to enjoy their life and not feel the pressure of having a mortgage payment. And the second way somebody can use it is to access equity. So here you have somebody that owns their house outright or has a lot of equity. And they've been paying on their house all these years. And now their house can start paying them three different ways they can access their equity. Think of it like an equity pie.

And they can eat their pie with lump sum. Maybe they need some money to update their home or they want to buy a car, they want to take a trip, or they want to help a kid or a grandkid or help their church. Now they got a chunk of money they can access. Another way they can do it. And they can move in and out of how they use this money. It's not locked in. They can, it's flexible.

The second way would be monthly payments. So I just, I have a guy right now I'm helping. And he goes, I want $1,600 the month. for 23 years. And sure enough, we dialed it in. He's actually getting more than that because the appraisal came a little bit higher than he thought. It's more like 27 years. He'll get $1,600 the month tax-free.

Well, that changes your retirement. And then the third way is somebody, this is actually becoming more and more common. You've got somebody that's lived in their home for all these years. They raised their kids there, but it doesn't really suit them now. Maybe they're stairs and they can't do the stairs anymore. it's too big and they don't want to clean or maintain the house or maybe they're not comfortable with the neighborhood because the neighborhood's changing and people move in and outright neighborhood's changed so now they can sell their house take the proceeds put 60 to 65 percent down depending

upon their age and now they can buy a house that better suits them in a stage of life no mortgage payment a house that is maybe newer no deferred maintenance single level living etc etc better neighborhood perhaps. And now they just have improved their living situation and they have no mortgage payment. So where does the reverse mortgage go in that scenario? Because if they sell their house and buy a smaller house, did they put the reverse mortgage on the smaller house for cash flow? Correct.

Yeah. Yeah. So yes, to your point, it's like four bedrooms, three baths, all the kids are gone. We don't need that. So let's sell the house. and now we bought a house cash free and clear, but we still need cash flow because of our lifestyle and living needs. So now we do the reverse mortgage on the smaller house,

and it's what we like because there's no steps or there's whatever the case is. So, yeah, that makes a whole lot of sense. Wow, yeah, that's really neat. I'll tell you a quick story about that when a couple came in, and they were living in Northwest Arkansas. They had family here. They moved back to the Colorado Springs. And he said, you know, I'm not in the best of health.

My wife's going to outlive me. I want to set her up to make sure she's going to be able. okay, when I'm gone. I said, well, tell me what that looks like. He goes, we want maintenance free home. They bought a townhouse with all the maintenance taking care of outside. And we're going to put this money down. We'll still have some money left because we're not using all of our money because the government program was putting up 40%. They were putting down 60%. And then no payment, whereas we'll cry. So at the end, we closed. They're very grateful. right before Christmas. A few months later she calls me and she says, hey, I just want to let you know Bill passed away and I said, oh, I'm so sorry. She goes, now you told us that as long as this was our primary home, we maintain it, we paid it, all the property taxes, only insurance insurance aid dues on time. There's no mortgage payment due, right? I said, that's right. Breed's a sigh of relief. She goes, great. That's the only way I can afford to stay in my home. Well, yeah. It's neat when you are providing services to people that it impacts their lives positively.

And you've just described a reverse mortgage, sir. Yeah. Yeah. Really amazing. Well, Kevin, it's just been such an eye-opening conversation. I really appreciate how you laid it out clearly. If someone is interested in learning more and then also reaching out and connecting with you, what's the best way they can do that?

You know, I've got a toll-free number, 877-251-9709. They can go on my website, reversemortgagerevolution.com. I got a ton of resources on there, consumer guide, videos, blogs, articles, interviews, et cetera. And that's a good resource forverseMorgaturvolution.com. If somebody just wants to run their numbers, happy to do that for them. There's no charge. We just talk about how it could work and see if it's a good fit for them. Well, Kevin, thank you so much for coming on.

It's been a real pleasure talking with you today. Thank you, Mike. I sure enjoyed it. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www.com.