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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However, a concerted effort by some of the nation’s largest mortgage lenders to promote reverse mortgages could significantly offset a decade-old lack of originators we’ve struggled with since the big bank departures if they can recruit the sales force needed. Leaders are usually the first to spot a market’s potential. The best leaders find the path to market expansion or they simply carve a new one.
Such a venture would require large traditional mortgage lenders to inculcate their sales staff with the ethos of reverse lending, the loan’s unique and prolonged sales cycle, and how to qualify homeowners. How many traditional mortgage originators would be suited for reverse lending, much less inclined to embark on a completely different career? That’s unclear.
What’s crystal clear though is the need for reverse mortgages and interest in the loan is certain to surge in the coming year and beyond. Inflation was one of the forces discussed in Reverse Market Insight’s presentation at NRMLA’s Eastern Meeting in Baltimore earlier this month. “If you’re someone on a fixed income, [then you may be] trying to decide between paying for the air conditioning in the summer or heat in the winter, or groceries,” said Reverse Market Insight’s Director of Client Relations Jon McCue during one session. “Some of these people were having to literally make these decisions”, reports Reverse Mortgage Daily.
Now a question for our listening audience. Will reverse mortgage borrowers in your city, county, or even your state find you? If they’re having to decide between keeping the thermostat at 82 degrees in the hottest summer months to afford to buy groceries do you think they may be inclined to reconsider a reverse mortgage or contemplate getting one for the first time? Many older homeowners, some house-rich and cash-poor, others with substantial retirement savings that won’t last as long thanks to inflation are going to have to make some very difficult decisions. Sure inflation drove up or inflated home values to record highs, but it also destroyed the purchasing power of Americans, especially those who are no longer working.
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3 Comments
Shannon:
I think the biggest problem is the leads or the Quality of the Leads,
Can you give us some direction????
Ken.Craynon@SNMC.com
513-315-0058
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.