Sitting comfortably in the top third of the Top 100 HECM Lenders list, Virginia-based TowneBank has been operating a reverse mortgage channel for several years.
Helping clients in Virginia, Maryland, and the Carolinas, TowneBank’s team of a dozen reverse specialists have closed 100 loans so far this year, positioning it to rival its 2017 totals despite the down market.
Chip Glover, EVP and director of capital markets who oversees the reverse channel, said that while Towne perhaps hasn’t been hit as hard as other reverse lenders, it has still searched to find its footing this year in the wake of major program changes.
“Like any other lender in this space, we have found ourselves dealing with decreased volumes and increased regulations around the appraisals as well as the principal limits that were imposed in October,” Glover said. “We’re working to figure out how to deal with the decline in production.”
Part of its strategy to capture volume in the current climate is to focus on the HECM for Purchase product, which allows senior homeowners to purchase a new home and obtain a reverse mortgage in a single transaction.
While the H4P – as it is widely known throughout the industry – is a unique financial tool that some have called a retirement gamechanger, the product’s acceptance in the marketplace has been slow to develop.
Since it was established in 2013, only about 11,000 of these loans have been originated, according to data from Reverse Market Insight.
Despite this, Glover said Towne sees real opportunity in the product.
“We think it affords us the best chance to be profitable in the HECM space,” he said. “We also feel like it’s an opportunity to assist the borrower in keeping his investments in play for the future, but at the same time as a means to provide housing.”
To promote the product, Glover said Towne’s reverse team will be leveraging the reputation of its parent bank and leaning on the Realter partnerships maintained by its forward arm.
“Towne utilizes a joint venture model in its forward lending. Our bank partners with real estate agencies, and through those relationships our LOs are able to get in front of real estate agents to talk to them about the Purchase product.”
“We’ve got to find ways to take our story to the masses, so they understand the way to use a reverse mortgage in the purchase world,” Glover said. “So, we’re leveraging our joint venture structure to get in front of the realty community and explain the product to them. Education is key.”
Glover said that while he thinks it may take time for the industry – and TowneBank – to fully recover from program changes, he does see signs of recovery.
“For us, I think it’s going to be another rough year, but I think that volumes have bottomed out and they are starting to swing a little bit in the other direction.”