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Reverse Mortgage Pull Through Rates Not Equal by Lender, But Why?

Were the big banks better at closing reverse mortgage loans? Not exactly, but data shows the lenders that recently left the industry had a higher percentage of loans that made it from case number assignment to close.

Pull through rates, or the rate at which a potential reverse mortgage borrower receives a case number and then ultimately closes a loan have decreased over time, with several different potential causes including falling appraisals and increased counseling protocols. But looking to the lender level may shed more light on the issue.

After introduction of the Financial Interview Tool to reverse mortgage counseling there has been some speculation as to whether counseling changes or lower-than-expected appraisals have led to lower pull through.

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While there is a small change noted pre- and post-FIT, a Department of Housing and Urban Development representative told attendees of the recent National Reverse Mortgage Lenders Association meeting in New York, at a decline from about 74% to 71%, the lender exits indicate more of an impact on the industry average.

All lenders are not alike, and the data shared by HUD showed pull through by lender had some discrepancies. Including recently departed lenders Wells Fargo and Bank of America, the data showed the average pull through on lenders that had exited at an average of 79%. Yet for the surviving lenders the average rate drops to 67%.

And among those remaining lenders the range falls between 53% and 75% pull through. So what might cause this difference?

One possible cause could be the policies some lenders have with regard to the application, including the timing of the process with regard to counseling, and what goes on pre-application.

Austin, Texas-based Reverse Mortgage USA, which has a pull through rate that is higher than average for top-10 lenders, according to data from Reverse Market Insight, uses a pre-application checklist to which it attributes its high level of pull through.

“A few years ago, we noticed that one of our loan officers had a pull through rate of about 93%—higher than the rest of our loan officers,” says John Mitchell, company founder. “We asked: why is that happening? She taught us what she was doing, and we were able to systemize a pre application checklist.”

The checklist, which features 10-15 different questions, is a way to target anything that could potentially go wrong, and flesh it out on the front end rather than later, Mitchell says.

“Are there title issues? Are there major repairs that need to be done? Who are the decision makers? We ask these questions all at once rather than having to address them later,” he says.

The company has implemented the checklist, which requires a loan officer’s signature before the application is taken. It has led directly to improved pull through.

“It really improved the process,” Mitchell says.

Written by Elizabeth Ecker

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