Is this Our Next Growth Market? - Skip to content

Is this Our Next Growth Market?


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Our next opportunity for growth may be right under our noses

Increase Reverse Mortgage Loan Production

It’s no surprise that in the wake of the housing crash, increased regulation, lower lending ratios and the HECM product redesign that many are seeking ways to expand their market and increase their loan production. Many have been successful in part in making inroads to financial professionals and others with builders, developers or real estate professionals. Some look to new advertising campaigns and public relations campaigns to help increase industry volume. Yet there is one sleeping giant that could easily be overlooked. FHA…

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  1. A possible negative of regular mortgage lenders doing reverses is their lack of training and knowledge of the product, which could add to the misinformation our potential borrowers receive. When I print out an application, it’s now 233 pages long, with more than half of that being the borrower’s copy. Overall volume should increase with more originators marketing the product, but more misinformation could be spread.

  2. The real question is: “Is our overall market growing or diminishing?” If forward lenders push the boundaries of the HECM market, then why would they not be welcome? But if the market marginally grows due to their addition but the net result is new players grabbing up market share, well how can we welcome them when total industry UPBs at funding are so far down?

    What AAG is showing the industry by its consuming other reverse mortgage operations is that many smaller HECM lenders are hurting. Yes, lenders may welcome new TPOs but not if their own retail units suffer or their new lenders shallow up overall market share.

    Even for lenders with increased volume or more market share, the real criteria is not endorsement volume but rather income statement revenues and cash flow.

  3. It is interesting to note that in order to sell Medicare Part C and D policies health insurance companies require licensed health and disability agents to take certification courses in Medicare and typically pass these courses with an 85% pass rate. Thus it would seem in the best interests of the reverse mortgage industry that just holding an NMLS license would be insufficient to represent a lenders’ products, lenders in our industry would be best served, and the industry would be best served, in my opinion, if originators had to certify proficiency in the RM products before beginning to sell them.

  4. Many a forward loan officer has operated in the reverse market and more often than not retreated from it given that the forward and reverse market are two different culture fields. Feeling at home in both cultures is not everybody’s strength. Eventually, every LO will begin to play to his/her dominant strength. As for me, I left the forward business eight years ago and enjoy the reverse business ever since.

  5. What Shannon has presented offers some new doors that we can open.

    I have read the comments by everyone so far and each of you have valid points. However, I think one main point is missing that Shannon was trying to get across to all of us.

    I may be wrong but I feel Shannon was trying to guide us in the direction of a traditional/forward lender as a referral source for us.

    Many times a traditional loan officer runs into opportunities for a reverse mortgage. By having someone to call on to zoom in and take the reigns and fill a need for the traditional LO, may enhance that LO’s future business.

    In short, the traditional LO who does not carry the HECM product can use the RM expert at times to build his or her own traditional loan business. I have seen it done, I have done it and I have those referral sources.

    As I said earlier, I believe this was one of the main points Shannon’s wanted to get across to us all.

    John A. Smaldone

  6. I enjoy attending competitors’ reverse mortgage seminars, and try once a quarter to work one into my schedule. Not long ago I attended a seminar aimed at realtors, hosted by a well-known mortgage company just entering the RM field. The presenter was not five minutes into her hour-long presentation before it became painfully apparent she was in deep weeds. When she got to her PowerPoint slide of a sample LOC amortization schedule, she tried to interpret it on the fly. I decline to go into detail, save for the fact the vicarious mortification I felt haunted me into the wee hours of the night – though the experience was redeemed by the fact I picked up two loans from my after-event conversations with realtors.

    If forward lenders are intent upon wading into the reverse pool, at bare minimum they need to provide their LOs an intensive training regimen. Our industry hardly needs more circulating disinformation, particularly when that information comes from a source a reasonable person would assume authoritative.

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