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The harvest is great but…

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The harvest is great but the workers are few

Seeing the potential of something with such incredible benefit but lacking the workforce to spread the word must be frustrating. Reverse mortgage professionals can certainly empathize.

And speaking of a workforce one of the challenges that have restrained our industry’s ability to gain market share in the last decade is the loss of large distribution channels. Namely the loss of big national-brand banks such as Wells Fargo, Bank of America, and others. While we certainly are not anticipating the return of big banks other more modest distribution opportunities should not be overlooked. One of those currently being touted is traditional or forward originators who have seen their pipeline of refinances and purchase mortgages collapse. 

While there’s certainly some potential in finding new originators among our traditional counterparts, the piecemeal inclusion of HECM loans is unlikely to generate a significant spike in application volume or market penetration.

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3 Comments

    • Ken, the lack of reverse mortgage leads continues and led to the departure of several lead companies from the reverse mortgage sector.

    • Currently leads on a large scale are only generated by lenders for consumption in their own (significant to substantial) call center operations. Quality leads for purchase are much more rare today than they were 15 years ago when companies like Lender Lead Solutions (later, SLN or Senior Lending Network) was selling RM leads that it could not readily turn into sales. Some of us who purchased their leads found them to be very suitable if one was willing to put in the work to turn them into sales. At first the cost of the leads was quite reasonable but then rose over time. Finally when my employer was ready to become a full eagle, SNL no longer allowed us to acquire any more of their leads.

      There are still a few lenders in the industry who generate more leads than they consume. One actually encourages originators to help him turn these leads into sales by working in his call center. His compensation is good and I know of one originator who went to work for him and was very pleased with the outcome.

      A friend of mine stumbled in the industry for months and then put together a plan that required him knocking on doors with the success of 3 to 4 large UPB HECMs each and every month until margins and the note rate index began to climb.

      Despite all of the anecdotes about the success of working with financial advisers, first time HECM borrower endorsements fell by 12.3% when comparing the 36,988 total endorsements from H4Ps and Traditional HECMs from the twelve month period ended 6/30/2021 to those same endorsements of 32,449 generated during the twelve month period ended 6/30/2022. Only a negligible number of HECM Refi endorsements have come from financial adviser referrals. Some will claim that the benefits are clearly seen in origination stats for proprietary RMs but credibility on that point is shaky at best since referral source data comes from less than unbiased sources and has yet to be subjected to any verification through attestation procedures on empirical evidence.

      Thus one can reasonably assume that it will take time for the industry to recover from the recent devastation to HECM Refi endorsements. This disruption comes from higher margins and also the required lender use of the one year CMT index on all HECM products including monthly adjusting HECMs. Like Montezuma’s revenge, the revenge of HMBS investors related to increased HECM Refi volume has been brutal causing higher interest rates to be used in the origination of all RMs.


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