Reverse Mortgage Lenders: No Longer One-Size-Fits-All

As reverse mortgage lenders adapt to change in the retail and wholesale climates, many are seeing—and are quickly adapting to—a rise in lending from smaller players including third-party originators.

They are ramping up efforts to train and assist those who are new to the business or who run smaller origination shops, and several lenders who have offered new programs to originators who fall somewhere between broker and correspondent are seeing their volumes grow.

It hasn’t always been the case.

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Last year, following the decision by the Department of Housing and Urban Development to allow non-FHA-approved third-party originators to originate HECM loans, many lenders said they would work only with experienced reverse mortgage specialists and said they would not welcome new originators into the market. Today, some are saying the opposite, and they are offering lots of ways for those new players to enter—and grow.

Spring, Texas-based Reverse Mortgage Solutions has six different “points of entry” to the reverse lending business, or what is calls “levels” within its third-party originator program.

“The idea is not only to have a lot of entry points, but also to have a way that an originator can grow their program,” says Mike Kent, senior vice president at RMS, who describes the programs RMS offers as spanning an originator who originates just a few loans and may not have the systems in place to process the loans, to larger players who can commit to a volume or dollar threshold—”and every flavor in between.”

Urban Financial Group and its ReverseIt! wholesale program, has long welcomed originators of all sizes and volumes. It currently offers programs for TPO brokers, principal agents and full-fledged correspondents who bring closed loans to Urban. The company says it has seen growing success in its TPO business over the last year, due in part to the loosened requirements that now allow non-FHA-approved TPOs to originate reverse mortgage loans.

Another top-10 lender, Genworth Financial Home Equity Access, recently rolled out a closed loan program of its own. While non-FHA-approved TPOs are not currently eligible under the program, Genworth sees the it as an opportunity for wholesale growth as well as leading to expansion for its correspondent lenders.

“The CLP was designed and launched to support the growth of existing Full Eagle reverse mortgage bankers,” says Bob Marseilles, national wholesale sales leader for Genworth. Additionally, he notes a growth opportunity for larger Full-Eagle forward institutions who are considering expansion into the reverse side of the business.

Whether the non-FHA-approved TPOs are leading the charge remains to be seen fully, but lenders say they are experiencing growth in through these new programs.

Both RMS and ReverseIt offer extensive training options for originators who are new to the business. They offer training sessions at their own offices, and will also offer on-site training to customers as required.

ReverseIt says that until last year it had just a small number of closed-loan sellers, whereas now, there are too many to count.

RMS has seen similar success with its six principle levels. There are three sponsored top levels, including one originators only, another for a TPO that can originate and process, and a third, which resembles a marketing affiliation affinity program for TPOs who don’t have the capacity to originate or process. Those include banks and credit unions who want to be able to provide the service of introducing a HECM lender to their customer.

“Whether they are experienced or brand new, we felt the concentration is going to be in the TPO area for companies looking to add additional support,” Rosynek says.

The three other levels for RMS’s TPOs include a principle authorized agent program, traditional correspondent program and a sixth—aggregation—level that supports an ongoing HECM lender that wants to look at maximizing its pipeline. The final level, which RMS says is less common among lenders, allows a lender to participate in RMS’s GNMA issuing activities. That sixth channel is growing very quickly, Rosynek says, in addition to TPO lending growing across the board.

“What I’m really seeing now is a much greater outreach from forward lenders looking to engage the HECM product and get to learn it,” Rosynek says. “Smaller clients have value,” says Rosynek. “There’s a tremendous amount of satisfaction in being able to help someone from the very beginnings to gaining market share.”

Urban’s Reverse it! has see that same outreach and is continuing its mission of working with originators whether they are doing one loan per month or 20, and attributes much of its growth from that flexibility.

“We don’t have a minimum requirement of loans,” says Sandy Tennekoon, AVP, Wholesale Relations and Business Development for Urban Financial. “If they do one loan in six months, we’re OK with that. That’s the way we’ve always been. A lot of our growth has come from that.”

Written by Elizabeth Ecker

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