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Liberty’s Michael Kent on the challenge – and the promise – of the reverse mortgage market

“There is still significant opportunity in the future for our industry”

Originations are down in the reverse mortgage industry right now, but Liberty Home Equity Solutions remains undeterred, focusing intently on increasing efficiencies and elevating its services to forge a road to recovery.

Its efforts might be paying off.

Most HECM lenders saw their volume fall last month, according to data from Reverse Market Insight. Two inched up 7%, but this paled in comparison to Liberty, which posted a 63% uptick in originations from August to September.

Of course, Liberty isn’t immune to the current conditions in the reverse mortgage space right now. Like every other HECM lender, it too has seen its overall loan volume decline in the wake of program changes instituted last year.

Regardless, the lender said it remains focused on elevating its offerings to combat the down market, and it will continue its mission to educate consumers about the loan. Liberty’s commitment to the space is no surprise – it has certainly been in the game for quite some time.

The California-based lender, which is a wholly owned subsidiary of Ocwen Financial, currently ranks No. 4 on the Top HECM Lenders list. It has been offering reverse mortgages for 15 years.

Founded in 2003 by the owners of a leading Sacramento-based financial planning firm, Liberty Reverse Mortgage has been twice acquired by major players in the lending realm – first by Genworth Financial in 2007, and then by Ocwen in 2013.

The company calls its staff “experts in senior solutions” and says it has “changed the lives” of nearly 64,000 seniors to date by helping them obtain a reverse mortgage.

Liberty’s optimism about the HECM’s promise is personified by its president, Michael Kent.

Formerly president of mortgage lending at RMS, Kent joined Liberty as president in 2015. Talking to Kent about reverse mortgages as the unintended side effect of also making you a proponent of reverse mortgages. His cheery, ardent belief in the product and unbridled optimism about the future of the space leaves a lasting impression.

ReverseReview sat down with Kent to talk about Liberty’s strategy for overcoming the current state of the market and his ideas about what the future of the reverse mortgage industry will look like in the years ahead.

Michael KentQ: Liberty has held strong as a leader in the reverse space for several years now. What is it doing right now to weather the down market?

A: We continue to do what we have always done – stay focused on the needs of our customers and partners. That is why we are an industry leader.

On our partner side, we have several initiatives underway to grow market participation and product diversification. Growing distribution and launching new products is positive for the entire industry and Liberty will continue its leadership in these areas.

It remains a very challenging market. This is why our partners rely on us to continue to deliver highly competitive pricing, industry-leading turn times and customer service excellence. In addition, our partners are looking to Liberty for input on new business and origination strategies.

Over the last few months, I have been receiving a high volume of calls from partners who want to discuss the reverse industry and their direction to success. This level of interest in having a forum to discuss various industry issues has led Liberty to form our Partner Advisory Committee. We will be rolling out this committee in the next couple months and hope to have our first meeting before the end of the year.

Liberty’s focus is on “changing lives,” and our entire staff works every day in fulfill this goal. We deliver on this promise by insuring our customers are well-informed and educated and our team is working closely with all our customers to get to the best outcome possible.

Q: What is Liberty’s focus as a company in the year ahead?

A: Liberty will continue to focus on delivering market-leading service and pricing that will help our partners remain competitive and grow their business. We will also focus on our own internal efficiencies and productivity. Growing market share, expanding distribution channels and product diversification are remain key initiatives for Liberty in 2019.

Q: What are your thoughts on the state of the HECM industry now? Lenders across the board have suffered from low volume this year – what do you think it will take to turn things around?

A: There is still significant opportunity in the future for our industry. All of the demographics are still in our favor and home appreciation continues to increase senior homeowners’ levels of home equity. The recent introduction of additional proprietary products is a great sign for the industry and positive reports continue to grow in number.

One of the more positive and promising developments is the increasing number of forward lenders interested in the product.

Q: Do you think that, as is, the HECM can achieve enough volume to be a sustainable product? Is it just a matter of lenders adjusting to the new order, or are changes to the program needed to make originating these loans a viable business?

A: I absolutely believe the HECM as it currently stands is a viable and sustainable product. I also believe that there is work yet to be done to insure the sustainability of the HECM program. Much of the work needed is in areas of the program that have less direct effect on the borrower and a greater effect on the issuers, servicers and the MMI Fund.

I believe many lenders are just now adjusting to the “new normal” in the HECM industry. However, over the next six to 12 months, I believe volumes will grow. The bigger challenge to the HECM program may be the effect additional proprietary products could have on HECM volumes.

Q: The industry has seen a lot of proprietary reverse products come to market this year. Do you think we’ll see these products eventually take up a bigger slice of the pie? Will non-agency reverses ever overtake the HECM?

A: I believe the brightest future for the reverse mortgage industry will include a very competitive balance between proprietary products and agency-insured products. There will always be a role for FHA to fill in this industry, but they should not be the only source for product.


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