Last year was a challenging one for reverse mortgage business activity, and it likely hit no one harder than the industry’s front-line loan originators.
After enduring challenges stemming from higher interest rates, stricter qualifications and broader industry consolidation, loan officers seem to be optimistic about how things have progressed in the early portion of 2024.
This is according to a series of RMD interviews with six reverse mortgage originators from across the U.S., including the states of California, Washington, Florida, Wisconsin and South Carolina.
‘Night and day’ difference
When posed with the simple question about how business is going so far this year, David Heilman — principal for HomeGrown Financial in Mount Pleasant, South Carolina — characterized the difference between early 2024 business and the same time last year as “night and day.”
“I don’t know if there’s really anything to really point to [why that’s the case],” Heilman said. “I’ve certainly seen more inquiries already. Typically, this is a slower time for me; January and February have always been slower months. In springtime, people start moving again, but so far in 2024 I feel like I’ve at least been getting more proposals out, which as we all know, results in more applications eventually.”
In Green Bay, Wisconsin, Jim Cullen of University Bank reports a similar trend.
“The year’s off to a good start,” he said. “I noticed toward the latter part of last year, getting into December, that for whatever reason, things started to pick up. I was getting some more direct inquiries and a few more referrals, so things started to get moving a little bit.
“Over the holidays, people are kind of tuned out, but once we got through to the New Year, more things are cooking.”
The change is a welcome one, since 2023 may have been Cullen’s “poorest year of 19 years in this business,” he explained. “I will confess that it was a struggle all year long.”
‘Active’ and ‘steady’ interest
Roughly 1,400 miles away, the phone continues to ring for Chris Bruser, reverse mortgage specialist at Mutual of Omaha Mortgage in Tampa. Bruser primarily operates through referrals and has seen consistent levels of inbound interest, he said.
“My financial planner business still continues to be very active,” he said. “But for me, I do a lot of [Home Equity Conversion Mortgage (HECM)] for Purchase. Obviously, we’ve got a lot of active adult communities down here, and we’re still building them. So, I’m really continuing to focus on the active adult market for what we call the “Lifestyle Home Loan,” commonly known as HECM for Purchase.”
Roughly 2,000 miles from Tampa in the Denver area, Bruce Simmons of American Liberty Mortgage reports that things are off to a “steady” start in 2024.
“As far as the interest in reverse mortgages, it has been steady,” he said. “But the challenges are still there as far as qualifying people to get enough proceeds. Those are the biggest challenges, and even when they do have enough income, sometimes they may say it’s not really worth it right now.”
Inconsistent interest rate forecasts have made things challenging in his business, but different kinds of marketing — including a refocusing exercise on his existing marketing efforts — have helped to improve things, Simmons explained.
The West Coast
“It’s starting out with some really good momentum,” he said. “A lot of my prospecting and strategic activities come into focus during the very first part of the year, and I’ve seen my pipeline get larger as a result of my activities, for sure. My outlook is very positive. I’m trying to increase my production over last year by a factor of two, probably.”
Down in the Los Angeles area, Tom O’Donoghue of Reverse Loans Now reported that his results in January were ahead of expectations.
“I just see a huge difference in the volume coming in,” he said. “My projections for January were that I would get eight new leads, and I ended up with 11. I was anticipating just two new applications, and I ended up with four. No fundings yet, but I am anticipating going into the end of this month, in February, that we should have three fundings, and then we should still have a good pipeline going into March. So, this definitely [makes for] a huge Improvement for myself.”
Dealing with challenges
Like others, O’Donoghue reported a challenging 2023, so much so that it shook his confidence, but speaking to mentors he respects in this space helped to give him perspective as he headed into business this year, he explained.
A lot of the business challenges last year did not seem to come from a lack of interest among potential customers, he said. Running the numbers for people illuminated terms that revealed either zero or not enough benefit based on rates and principal limit factors, but that has slowly started to shift.
“Toward the end of the year and the beginning of January when the numbers started to change, we [ran numbers] for people that we could get off the fence to move forward, and new leads that came in where homes were free and clear,” O’Donoghue said. “So, that helped get people off the fence as well.”