The Eroding Barriers Between Forward and Reverse Mortgage Originators

As more reverse mortgage companies continue to expand their operations into the forward space in response to business changes and new realities, a shift appears to be taking place in what was once seen as conventional wisdom: the separation of forward and reverse mortgage business practices, in order for originators to remain specialized in one of the fields so that more dedicated service could be provided one way or the other.

Naturally, a question arises among companies operating in both spaces concerning whether or not their loan officers should be reflexively allowed to originate both forward and reverse mortgages, or maintain their dedicated skills in either the forward or reverse spaces exclusively.

“Not as specialized”

Because forward business is again becoming more prominent in the reverse space, a discussion naturally arises about those companies’ loan officers: whether or not they can be feasibly trained to offer both traditional and reverse mortgages simultaneously, or whether they should maintain their specializations in each offering.

“I do see it as a change where the reverse mortgage product becomes just another mortgage product,” said Bruce Barnes, EVP of Live Well Financial in an interview with RMD. Barnes related that his company can train forward mortgage loan officers with relative ease to operate in the reverse space. “It’s not as specialized as it once was,” he said.

Much of the new integrations taking place between the forward and reverse sides of the mortgage business also now include requirements that have always been part of the forward mortgage business, such as the addition of a financial assessment for reverse mortgage borrowers. This changed the underwriting process, adding a credit analysis and more documentation to the larger process of reverse origination. In some respect, many of the new integrations are due to the advances being made in the industry’s technological tools, Barnes feels.

“It used to be that it was complicated to understand and quote and move a customer forward,” he said. “But with the implementation of new tools and technologies and training, we can move originators forward in the reverse product fairly simply at this point.”

The tools that the company offers should be understood sufficiently among its loan officers, Barnes expressed.

“Any of the products that are offered in the mortgage space, it’s just another mortgage product available to an originator that they need to be aware of to be successful in the business,” he said.

“A much different challenge”

However, some are hanging onto the conventional wisdom that maintains the separation of forward and reverse skill-sets among originators. That separation needs to be maintained, according to Scott Harmes, National Manager of the C2 Reverse Mortgage Division of C2 Financial Corp.

The nature of the reverse, he says, will always make it a more unique product. While he acknowledges that the wall between forward and reverse is eroding, he doesn’t believe reverse’s more specialized nature is being diminished.

“Some loan officers who begin originating on the reverse side are taking the attitude that the reverse is ‘just another mortgage.’ It’s not,” Harmes told RMD. “That’s why truly within C2, we consider our in-house certification program to be an internal licensing program, and it’s required to originate reverse with us.”

The importance of specialized training

Harmes also said that as companies continue to offer both products, emphasizing the right training for loan officers to understand the unique realities of reverse is becoming more important, not less.

Key to this is C2’s internal training system for loan officers who may be adding reverse mortgages to the suite of products that they can offer. C2’s program includes training on the reverse mortgage product itself, the market, the protected class of seniors, and the NRMLA Code of Ethics and Professional Responsibility.

“That way, we can have loan officers out there that are really competently and ethically originating reverse, because it is a much different challenge than originating traditional mortgages,” Harmes said. “Even though a lot of the knowledge and skills are complementary.”

Harmes also related that a further distinction between forward and reverse could be in looking at product similarities in other industries.

“[Originating reverse mortgages] is more akin to selling an insurance product than originating a traditional mortgage,” Harmes said. “And, when you think about it, the Certified Reverse Mortgage Professional (CRMP) designation…there’s only 160 of them nationwide, and there’s a reason for that: it’s hard.”

The exclusivity of the National Reverse Mortgage Lenders Association (NRMLA) designation, he says, emphasizes even further the difficulty and dedication it takes to excel as a dedicated reverse mortgage professional.

“That takes it to a whole other level of commitment versus the loan officer who says, ‘I can do forward, so I can do reverse.’”

Focus is key

On the corporate level, there are still some companies that keep a staunch separation between the two departments, as was long-held tradition among most lenders.

“We don’t combine [forward and reverse]. Never did, and never will,” said Glenn Wallace, president of Nationwide Equities based in Mahwah, N.J. Much of Nationwide’s company philosophy centers on focus, which leads to dedicated divisions and personnel for its different product offerings.

“Having someone who has one loan they’re working on as a reverse, and the next one as a forward? No. Just like we separate wholesale from retail. Even though we do very little wholesale these days, we still have focused staff on wholesale. We have a reverse division focused on reverse and a forward division focused on forward.”

Wallace summed up his perspective by emphasizing that the skill sets needed for successful reverse origination are different enough to require their own dedicated resources.

“The reverse world is a lot different, a different animal,” he said. “You have to focus and get the right people to do the right job. If you make a great electrician, you’d [probably] make a lousy plumber.”

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