Many in the industry have lamented the loss of Wells Fargo and Bank of America from an educational and brand awareness standpoint, but the exits are driving new referral business to lenders who remain.
Reports have shown larger lenders saw a boost in volume following the exits, it also appears that some much smaller originators are beginning to see an uptick in business as well, and it’s largely due to new referrals they say otherwise would have gone to the big bank competition.
“In a weird way, I’m getting more referrals now from mortgage companies that don’t do reverses,” says Alain Valles, founder and president of Norwell, Mass.-based Direct Finance Corp. Valles said he has received more referral calls recently from mortgage companies that don’t do reverse mortgages, and estimates that roughly 20% of his reverse business comes from those kinds of calls.
Those referrals, he suspects, are increasing due to the large bank exits. Where non-reverse lenders might have referred potential customers to the big bank branches in the past, now they are going directly to smaller shops and the remaining, boots-on-the-ground players. That, or in the absence of those branches, borrowers are simply seeking smaller brokers for their loans.
“We are seeing more activity since the Wells Fargo/Bank of America departures,” Mike Gruly, 1st Financial Reverse Mortgages, told RMD in an email. “We think what is happening is that the banks used to receive many referrals from accountants, financial planners, investment advisors, housing specialist, Realtors, non-profit groups, etc. due to their brand recognition and geographic locations. Now that they are gone, these professionals are looking elsewhere to send their clients for reverse mortgages.”
Several other originators have told RMD the same: they are getting more referral calls, and from different kinds of people, from forward lenders to financial planners and accountants.
The numbers have yet to shake down when it comes to the volume lost by the large lender exits. While some recent data seemed to indicate that the industry had recovered losses following the Bank of America exit in February, a report from Reverse Market Insight noted factors that made the data look better than it initially appeared.
The jury is still out on how the Wells Fargo Exit will impact overall volume, but RMI has noted a trend showing that the Top-10 lenders have gained in the wake of those exits. From MetLife and Urban Financial to American Advisors Group and Security One Lending, those Top-10 lenders are seeing a boost in overall volume.
But with more than a handful of even smaller originators telling RMD that their business is also benefiting, the new referrals that stem from those exits are also boosting the other end of the spectrum. The influx may have to do with the fact that Wells Fargo had the ability to draw referrals with its broad presence in the industry, one retail originator told RMD.
A promotion from Wells Fargo in February offered 2% of the max claim amount as a referral fee—no appraisal, processing or application needed. With Wells now gone from the industry, it’s unknown how successful such a campaign could have been. But one thing is clear: The referral business is flowing.
“Remaining reverse mortgage lenders with experience and good reputations seem to be getting these referrals now,” Gruley says.
Written by Elizabeth Ecker