Despite Market Changes, AAG Looks to Set New Reverse Mortgage Records

Despite uncertainty in the market for reverse mortgages with new lending requirements expected from the Federal Housing Administration this month, American Advisors Group counted its best month ever for loan volume in July in completing 914 endorsed loans. 

“We have been able to capitalize on the growth and seasoning of our sales floor as we have aggressively hired over the last year and a half,” said Paul Fiore, AAG’s senior vice president of retail lending. “We have focused a lot of our attention on providing borrowers with exceptional customer service and presenting all the reverse mortgage product options in a manner that allows the client to make an educated decision. 

In addition to increasing hiring efforts in growing its staff to more than 600, AAG in July completed its first-ever HMBS security issuance after receiving approval from Ginnie Mae. The company issued $71 million in reverse mortgage securities in its first month. 

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“Getting our Ginnie Mae authority in mid-July and being able settle five pools in just three weeks is a great start to the second half of the year,” AAG COO Chris Mullins said. “We see our participation in the Ginnie Mae program as the next step in AAG’s evolution as it allows us to be another liquidity provider for the industry. In particular, it will allow us to provide more support in helping our wholesale and correspondent partners in growing their businesses.”

AAG sees much more growth potential across not only its retail channel, but also wholesale and its secondary market participation. 

“We anticipate sharp growth for wholesale fueled by our Issuance capabilities along with the seasoning of our team,” says AAG Founder and CEO Reza Jahangiri. 

Rules expected from FHA this month designed to help protect the agency’s insurance fund as well as reverse mortgage borrowers may lead to a short-term downturn, Jahangiri says, but long term, the changes will help drive growth. 

“In the short term, there will be some volume reduction across the board in the industry but in the long haul putting a utilization restriction in place and having Financial Assessment and set asides to tackle tax and insurance defaults is going to drastically benefit the industry,” he says. “There is going to be more acceptance, less headline risk and eventually industry growth as a result of these changes.”

The company is positioned to implement the changes when they become known, both through its sales force as well as its national marketing campaign featuring former Senator Fred Thompson.

“In this new market, it’s more important than ever to ensure that borrowers fully understand their options and whether a reverse mortgage is the right choice for them,” Fiore says. “We believe in a consultative sales approach and not a one-call close mentality.”

Written by Elizabeth Ecker