Despite Elimination of HECM Advisor Program, Banks Still Working with Reverse Mortgage Lenders

When HUD announced it was ending the HECM advisor program in September, some (including myself) were concerned that companies wouldn’t refer customers to reverse mortgage lenders if they couldn’t earn the referral fee.  It turns out that’s not the case.  Over the past few months, different local banks and credit unions have announced partnerships with reverse mortgage lenders that enable them to offer the product to its customers. 

For example, an article from the North Kitsap Herald details how Washington State based Kitsap Bank formed a partnership with Security Reverse Mortgage Company which enables them to offer reverse mortgages to its customers.  “Our decision to offer a reverse mortgage is part of Kitsap Bank’s commitment to providing the community with products and services which enhance our neighbors’ financial well-being,” said Kitsap Bank President and CEO James Carmichael.

Another company that primarily works with regional banks and credit unions is 1st Reverse Mortgage USA.  Prior to the elimination of the HECM advisor program, the Lakewood, CO based company spent months preparing for the possibility that it would be would be discontinued.

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“We had been working with our legal team to prepare contracts that took our accounts from Advisors to Correspondents, and we worked with our accounts to make sure their FHA status was in place that would allow us to transition them to Correspondents,” said Barry Scoles, Senior Account Executive at 1st Reverse Mortgage USA.

By working with 1st Reverse USA, banks aren’t required to devote the significant financial and manpower resources that would be needed if they pursued a full, more traditional, correspondent relationship. 

“In our fulfillment concept we do most of the heavy lifting. While the bank provides the essential services that keeps them compliant and maintaining excellent customer service, we are behind the scenes providing turn-key marketing, origination, processing, underwriting and closing support” added Scoles. 

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  • so how are the seniors protected from the banks who do not have a fire wall rewall from the investments and insurance section of the bank in violation of Huds new rules. How are there loan orginators being compansated for only taking the apps. Is this another way banks are skirting rules like our new secratary of the treasurer or almost health secratary Daschel?
    Serving there customer HA!HA!

  • Why non-FHA banks or other non-FHA lenders can’t get compensated for a Reverse mortgage lead is absolutely ludicrous! The FHA banks that are “correspondents” usually don’t have the know how or experience to competently assist a senior in the reverse mortgage process.

    Let the Reverse Mortgage Specialist do their job and still allow non-FHA banks to offer reverse mortgages to their customers and get paid for the customer service part. The HECM Advisor program should be re-introduced with less compensation and responsibilities going to the bank. All the non-FHA banks should need to provide is the interested customer’s name and number. They still offer the service and can get compensated as well. Very simple.

  • Large banks who do not offer HECM’s face the possibility of losing their entire customer relationship if their customers go across the street to BOA or Wells or other bank lenders. Having a non competitor who is not a bricks and mortar institution such as a MetLife or Generations accomplishes the dual goal of providing their customer with expertise and/or a service they dont offer anyway and safeguards the valuable customer relationship they have taken time and money to cultivate.

    Whether the referring bank is paid a fee is secondary. Attracting new clients is more costly than retaining current ones.

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