Virtual Reverse Mortgage Originations Present Promise, Risk

With seemingly everything available with the click of a mouse, some reverse mortgage product innovators don’t want their products to be an exception.

In October, Liberty Home Equity Solutions president Michael Kent told RMD that developing this type of system is one of his priorities for 2018. He said that personally he would want to open a forward or reverse mortgage right from home.

Since he already conducts a significant amount of his everyday business online — from booking travel to Christmas shopping — he sees no reason why today’s seniors wouldn’t be open to completing a reverse mortgage in the same way.

“I’d be perfectly comfortable transacting a mortgage transaction online, and we see it in the forward space — the Rocket Mortgage coming out of Quicken,” Kent said.

Kristen Sieffert, president of Finance of America Reverse, said that while consumers are becoming more tech-savvy and conducting a large portion of their mortgage research online, she does not see a fully virtual origination happening any time soon.

“Eventually, we expect consumers to have an increasing appetite to begin loan applications online, but we aren’t seeing a strong desire for that today,” she said.
Sieffert pointed out that there are a some online origination products, such as ReverseVision and the All Reverse Loan Optimizer (ARLO), that already automate parts of the origination process.

“These tools, coupled with increasing consumer appetite for online transactions, integration with the HECM counseling requirement and Financial Assessment, and perhaps some best practices from the forward mortgage space, could see the industry offering online origination sooner than we might expect,” she said.

Regardless of consumer interest, some industry insiders say that reverse mortgages are too complex for a totally online origination.

From the third-party originator’s perspective, Beth Paterson, executive vice president at Reverse Mortgages SIDAC in St. Paul, Minn., said she sees a virtual reverse originator as a “major negative” — and that nothing beats a face-to-face meeting. She said it could lead to a misinformed borrower, which in turn could lead to more bad press for the industry.

“I am very hands-on and give lots of explanation — meeting with clients, going through all the details, and explaining all the fees, and I still have borrowers who call me years later and ask for clarification. If people are just signing documents and they are not understanding what they are signing, they are going to get into trouble,” Paterson said.

Kent, however, said he envisions a future where loan officers can respond to potential borrowers’ questions through instant messaging, or even through an animated avatar that can chat with the borrower just like a flesh-and-blood employee.

“I’ve told people: I don’t need someone to come to my house,” he said.
Megen Lawler, president of reverse mortgage software company Bay Docs, Inc., echoed Paterson’s concerns regarding the complexity of the product, both from a consumer and developer perspective. Bay Docs offers the reverse mortgage origination software Reverse Express.

“I just don’t see why — compliance-wise — why any one would want to do that,” she said, adding that her company is not working to develop a fully automated mortgage origination.

This edition of the RMD Report is sponsored by national appraisal management company Landmark Network.

Written by Maggie Callahan

Alex Spanko contributed reporting.

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