With proprietary reverse mortgage products starting to come back, an interview from National Mortgage Professional discusses the development of the very first private securitization of reverse mortgages.
Atare Agbamu sits down with Joe Kelly and Michael McCully, co-founders of New View Advisors to discuss the challenges of securitizing private reverse mortgage products and the where they see the industry headed.
The company said it believes “the key to success for reverse mortgages is the establishment of a lower LTV, low-cost product with zero upfront fees in exchange for lesser proceeds.”
At Lehman Brothers in 1999, you pioneered the securitization of reverse mortgages in the U.S. secondary market. What attracted you to reverse mortgages as an asset class, and why did you commit to them?
We were attracted to the reverse mortgage industry because it combined our multiyear expertise in mortgage finance, corporate finance and capital markets with a product that had a clear and tangible benefit to society. There existed an opportunity to lend the credibility of a global mortgage franchise in Lehman Brothers to a struggling asset class with unlimited potential. We believed it would become a mainstream product with sufficient education, secondary markets distribution and innovative product development.
Do you still hold that belief in the unlimited potential of reverse mortgages? Why?
We still believe that reverse mortgages are an essential financial product that will grow dramatically in numbers and importance over the next several years. The recent financial crisis took away mortgage alternatives for seniors and has reduced wealth, thus increasingly making reverse mortgages the last, best alternative to supplement income. The demographic wave is too strong and the need is too great, and we also believe that necessity being the mother of invention, the industry can adapt to the changes in the financial markets.
Read the rest of the interview at the link below:
The HECM at 20 Series: The engineers of reverse mortgage securitization
