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National Bank Buys Into Future of HECM


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Does Mutual of Omaha Bank’s purchase signal the return of big banks?

Industry veterans can recall when big banks reigned supreme. Wells Fargo, Bank of America, and MetLife accounted for the majority of reverse mortgage loan production; that is before their ultimate exit from HECM lending. In June 2011 a New York Times column noted the following in the wake of Bank of America’s exit and Wells Fargo’s announced planned departure. “The nation’s two biggest providers of reverse mortgages are no longer offering the loans, as the economics of the business have come under pressure. The loans have increasingly become a riskier proposition. Banks are not allowed to assess borrowers’ ability to keep up with all their payments, and more borrowers do not have the wherewithal to stay current on their homeowners’ insurance and property taxes, both of which have risen in many parts of the country.”

While citing concerns of defaults resulting from nonpayment of property charges, many suspected the banks were apprehensive of reputation risk when foreclosing on defaulted HECM loans. In November 2011 Met Life announced their plans to implement their own financial assessment. A short time later in April 2012 Met Life announced their exit.

Fast-forward to last week’s announcement of Mutual of Omaha Bank’s purchase of Synergy One Lending (the parent company of Retirement Funding Solutions). This came as quite a surprise to industry participants who remember big banks fleeing the space and more so as the industry has struggled to return to significant gains in endorsement volume. According to Reverse Mortgage Daily, Mutual of Omaha entered into discussions last summer- before HUD dramatically curtailed the HECM with changes implemented last October. While many lamented the changes they did not derail the planned purchase. “That was a good long-term change for the product, and it’s still a very attractive product for a lot of borrowers. We’re excited to jump into the space. We just think the timing is right”, said Terry Connealy, president of Mutual of Omaha Mortgage. He added the changes make the HECM a “much more customer-friendly and safer product.”

Just as many regional lenders have embraced the concept of ‘generational lending’- offering mortgage products to their customers throughout all stages of life- Mutual of Omaha is embracing the approach on a national level. More importantly, Mutual brings the power of a trusted and well-known brand to the marketplace. While Synergy One will operate under its own name after the deal is inked, eventually the HECM will be marketed under the Mutual of Omaha brand  In addition, they hold the distinct advantage being a federally-chartered bank not being burdened with the requirements of state licensing for their sales force.

Does Mutual of Omaha’s entry signal the eventual return of national brand banks to HECM lending? If so, would their return push our industry closer to a steady footing of sustainable growth in the wake of countless product changes and cutbacks? While counterintuitive on its face, the purchase mirrors the choice of countless corporations to strategically enter an industry in midst of a market downturn. Perhaps Mutual of Omaha’s will be welcomed as long lost friend, one whose help is sorely needed.

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  1. While there is plenty of room for optimism in the industry, as Yoda of Star Wars Episode VI fame would have said: “a single transaction, a trend does not make.” The last time we had a true trend from major banks was when the Big Three banks left the industry.

    This is a deal to watch carefully for one word, commitment. If the bank and more importantly its parent, Mutual of Omaha throw their massive weight behind this acquisition in creating great new marketing brochures, ads, marketing campaigns, etc., it has a genuine chance of lasting out the current patter of secular stagnation. Without the outspoken support of Mr. James T. Blackledge, this deal could run the same course as the one with Walter, or the three big banks.

  2. I’m hopeful that in addition to the HECM product, Mutual of Omaha will eventually look to offer a proprietary reverse especially in New York. Hoping to see someone break that barrier and allow homeowners with more valuable assets to access the proprietary reverse product features and benefits.

  3. Shannon,

    I realize there are mixed feelings in the industry on the acquisition of Synergy 1 by Mutual Of Omaha Bank.

    However, I have a completely different view than some have, and I am NOT talking about Jim Veale or Margaret Argento! They have the right attitude about it!

    I feel that Terry Connealy of Mutual of Omaha Bank has pegged it right! The strategy plan he has adopted not only has an excellent chance come to fruition but makes a lot of common sense as well!

    Mutual of Omaha Bank can be and I feel will be a major player in the months and years ahead in the HECM world.

    They are positioned just right, they are a bank, they will fund their own product, I am sure they will be the GNMA issuer and being a full product provider will give them a major edge in the market!

    Another advantage I see Mutual of Omaha Bank having is the ability to do the construction lending in conjunction with doing the H4P program!

    I feel this is a positive move for our industry as well as opening up career opportunities for many.

    I realize time will tell but I agree with Terry Connealy, the timing is right. I am exited for them and Torry Larson!!

    John A. Smaldone

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