Reverse Mortgage Lenders Ready to Take 2012 by Storm

With the last of Wells Fargo reverse mortgage volume making its way off the books, it is becoming even more clear that the large lender exits had the biggest—and most profitable—impact on their business in 2011. That opportunity is setting the tone for 2012.

Although the exits of Financial Freedom, Bank of America, and Wells Fargo from the reverse mortgage market came as a shock, many originators are now realizing that it’s not the end of the world, after all, as they reflect back on the year.

“[The exits] created potential opportunities that did not exist in 2011,” says David Wind, president of Guaranteed Home Mortgage Company. Guaranteed, which launched its reverse mortgage division in May of this year, has taken advantage of industry developments by making quality additions to its staff.

“The good news is, we’ve had the opportunity to recruit some top talent,” he says.

Initially, originators say they were shocked to see the two banks that comprised a total of 40% of the industry’s volume leave such a vast opening in the market.

Many lamented the loss of those recognized brands in the business and questioned the impact their absence would have. But looking back on 2011, the outcome on volume has been largely positive, and remaining lenders are looking forward to a robust 2012.

“I was shocked by it, but it created greater opportunities for people like me,” says Greg Shearer, a reverse mortgage loan officer with The Senior Equity Group. With the well known brands out of the picture, Shearer has seen a 40% increase in business.

“It was definitely a blessing for me,” he says.

Although reverse mortgage endorsement volume has dropped off since the big banks departed, and remains nearly 29% beneath last year’s level, it seems the smaller lenders are beginning to pick up the slack, Reverse Market Insight reported in a November industry report.

That includes double- and even triple-digit volume increases for several lenders in and outside of the top-10 list over the course of the past 12 months.

Besides MetLife, the expected front runner, other lenders including Urban Financial and American Advisors Group have stepped up, with some seeing their volume surge compared to last year. MetLife’s endorsements have grown 184% compared to 2010 volume, with Urban’s going up 66% and AAG seeing a 169% boost year-to-date.

The lenders say the exits have not only helped from a volume standpoint, but have provided the chance to increase presence from a brand standpoint in addition.

“I think it’s a natural progression when recognized names exit, for borrowers to seek out recognized brand,” says Paul Fiore, head of sales for AAG. “We can attribute volume growth to both fallout from Wells and Bank of America, but also continued efforts to building our brand and brand awareness.”

AAG saw a record year in 2011, which it attributes in part to the bank exits. And the company sees the increases spanning into 2012.

While November and December historically have lower volume due to the holiday season, it was not the case this year for AAG. New applications set a company record in November, leading the company to “extremely bullish” growth projections in the coming year.

“Over time, yes, it will be a blessing,” says David Cook, manager of Network Funding, LP’s reverse mortgage division. “Lenders are going to see an increase in market share and former employees who are experienced and already have a strong referral base and ongoing pipelines of prospects.”

Written by Alyssa Gerace

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