Beyond generational lending: Bank and lender partnerships
On it’s face the reluctance of mortgage lenders to offer reverse mortgages could be seen as a setback. Recent survey results from the Stratmor Group’s sampling of 120 traditional mortgage lenders reveal only 35% currently offer the HECM. The number one reason given by those not offering the loan was reputation risk followed by distractions from their core business, a lack of internal HECM expertise, and profitability concerns. In light of these findings, HECM professionals could find an opportunity to provide an external solution that meets the needs of the homeowner and assuages the concerns of traditional lenders.
Much attention has been given to the concept of generational lending which provides a variety of situation-specific mortgage products throughout the life of their customer, their children or parents. While this holistic approach to mortgage lending is admirable as it is practical, few lenders offer both traditional and reverse mortgages.
With falling FHA case numbers showing fewer qualified borrowers, and several years of stagnant endorsement volumes, lenders and originators alike are seeking out new ways to attract qualified homeowners. Mindful of this much of the recent conversation has centered on expanding referral partnerships with financial professionals or realtors to leverage the HECM for Purchase. However another opportunity has been largely overlooked, and that opportunity is hiding in plain sight across small towns and large cities…