Lenders Struggle to Reach Builders with Reverse Mortgage for Purchase Program

Builders and developers are another group in addition to realtors that has yet to be educated on the realities of the HECM for Purchase program. “We need to take the time to understand the realities of their business and be able to talk to them in their language,” says Monte Howard, Affinity Relationship Director at Generation Mortgage.

Builders and developers are trying to move large volumes of inventory at this point, and the HECM for Purchase program might be able to help—especially in retirement communities.

But Howard notes that he has yet to reach out to the builders and developers, on account of feeling that pursuing such relationships is premature until the reverse mortgage industry has “their ducks in a row.”   He notes that when the reverse mortgage industry approaches builders, it is important that they come through the door with more than just a loan product. HECM for Purchases are still an unknown for most people, but he notes the time for them to be marketed to builders and developers is coming.

So why hasn’t the industry whole-heartedly embraced telling realtors, builders, and developers about the HECM for Purchase program? It is because, according to Howard and Derry Hampton, a reverse mortgage professional at Security 1 Lending and a licensed realtor, many still don’t fully understand it themselves. Many lenders have not yet taken the time to understand the product, and most loan companies have yet to build marketing campaigns around it. Without the industry taking it upon themselves to learn and understand the product, it is hard to expect realtors, builders, and developers to do the same.

Howard notes that, “It’s one thing to show somebody the light, but you also have to show them where the switch is.” What’s been missing is an explanation of the HECM for Purchase process. While people may be becoming familiar with the HECM for purchase product, Howard believes that the volume of HECM for purchases will increase once there is better understanding of the HECM for purchase process. He notes that some title companies are still uncomfortable with the transactions.

Until the reverse mortgage industry takes the time to educate itself and others on the HECM for Purchase product, it remains extremely unlikely that HECM for Purchase transactions will meet the FHA’s expectations next year.

Written by Reva Minkoff

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