Mortgage

Adopting HECMs as a “generational lending” strategy

Why LOs need to include reverse mortgages in their product offerings

You’re a lender.

You help a first-time homebuyer get into that starter house. Then, you help them refinance and lock in a lower rate. Then, you help then secure a HELOC so they can finance some renovations.

But then what? Is that the end of the road for you and this client you have worked with for so many years?

It shouldn’t be, according to reverse mortgage software provider and three-time HW Tech100 winner ReverseVision. There’s one loan left – a reverse mortgage. It may be the last loan a client gets and you should be the one to help them get it.

In the last year, ReverseVision has worked to connect with traditional mortgage lenders about why they should bring reverse mortgages into their suite of product offerings. In doing so, it has coined what it calls a “generational lending” strategy.

The idea is simply that lenders should offer borrowers a product that suits them through every phase of their lives. As a product designed for adults over 62 to help them age in place, a reverse mortgage is the last loan in the line.

According to Wendy Peel, ReverseVision’s vice president of sales and marketing, lenders that don’t offer reverses are missing the boat.

“All lending is suffering with volume,” Peel said. “By not adopting this strategy, especially in a competitive market, lenders may be at risk to lose borrowers to a competitor.”

In fact, several lenders with reverse mortgage divisions are currently teaching their forward LOs how to originate HECMs.

Recently, Cherry Creek Mortgage told HousingWire that it plans to help its originators grow its business by incorporating HECMs into the company's product mix.

US Mortgage Corporation also told us it has established a curriculum to educate its forward LOs about reverses.

Peel said the move just makes sense. Baby Boomers have a tremendous amount of tappable equity – $6 trillion, according to the latest data – and according to Peel, a reverse mortgage can help them use it in order to supplement their retirement income, pay for grandchildren’s weddings or education, or provide financial assistance for children or grandchildren to purchase homes.

While she acknowledged that some traditional lenders may have reservations about adopting reverses, Peel said that the product has come a long way.

“Lenders need to understand that regulatory changes over the past five years have made this product safe for both the borrower and lender,” she said. “Learn these changes – it matters.”

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