“We are still pioneers. It’s not our first rodeo, but we haven’t seen the last bull.”
Some like to think of Jeff Taylor as the “Godfather” of reverse mortgages. From his work in creating the product from the ground up starting in 1989, founding the industry’s trade association and working with several industry mainstays over the course of his reverse mortgage career, Taylor now owns his own consulting company, Wendover Consulting, based in Greensboro, North Carolina.
From the initial work with HUD on a pilot program to the exit of major lenders from the business last year, Taylor sat down with RMD to share his take on what plagues this industry, and the “new breed” of mortgage companies who will carry the torch.
RMD: The first reverse mortgage was done in 1989. When would you say yougot your start in this business?
Jeff Taylor: We got started in 1989 at Wendover Funding Inc. Our company worked hand-in-hand with the Department of Housing and Urban Development (HUD) and offered lenders the opportunity to get involved with reverse mortgages. Originally, it was a pilot program with 50 lenders selected—50 lenders could make 50 loans.
RMD: Where was the growth opportunity after that pilot launched?
JT: There were no front-end systems at that time, and companies didn’t know how to service the loans because it was a brand-new concept. In fact, the calculator was written in DOS (remember DOS?). So, our company partnered with HUD and said, “We’ll build a subservicing system option for lenders to originate and subservice through us.” The rest is history, as they say. Wendover was at that time, the largest subservicer, then we got into correspondent and wholesale.
RMD: How did you part ways with the original Wendover?
JT: I retired from Wendover and was then hired by Wells Fargo as a consultant.This gave rise to the consultancy to which I’ve returned. We looked to see how we could grow the Wells Fargo program, grow resources and infrastructure.Again the rest is history. We grew exponentially to almost 1,000 loan officers. All along that time, we had a keen awareness of the need for seniors, the national progression.
RMD: How is the industry different now?
JT: Today, look at the number of subservicing options—there are a number tochoose from. Lack of servicing system resources in the 90s and early 2000s was one of the biggest obstacles for lenders who wanted to originate and service. When I think about the journey, it goes back to that time, prior to Fannie and Freddie and having access to no universal state mortgage documents. Lenders then had to work with law firms and have individual reverse mortgage state documents created.
RMD: What do you see in the future for today’s lenders?
JT: The people that really got the reverse mortgage program off the ground were the smaller FHA-approved lenders. If they had not had the tools to succeed,they wouldn’t have been able to get off the ground. It wasn’t until the early 2000s that you saw major banks enter the market. Now, with the absence of some major banks, we have a new breed of mortgage company and they will be the ones to carry the torch and provide home equity liquidity options for seniors.
RMD: How does Wendover help those folks today?
JT: We advise and provide guidance for those who are in the space and those who are considering it. There are several hurdles for the HECM program today, but the largest that is attributed to the falling home values. I don’t think the demand has gone away.
RMD: Tell us about helping to establish the industry’s trade association, NRMLA. How has the need changed?
JT: Back in 1997, 20 lenders put up capital at the time to properly organize ourselves as a trade association. Today, we would not want to go through this environment without the platform and lobbying expertise of NRMLA.
RMD: Where do we go now?
JT: We haven’t seen the last of new entrants, and there are always rumors about the next proprietary product. What will it look like? Will it be offered by a big insurance company? I think all these questions are answered when property values stabilize and seniors once again view their home equity as an asset.There’s a whole segment that’s underserved because their home values in somecases may have fallen as much as 40% and they owe more than the equity theyhave. Some people are still sitting on the sidelines.
The other challenge is some needed guidance from HUD on what the HECM product looks like with respect to seniors who may have issues with ongoing property charges. No one wants to put a senior in harm’s way. It should be no different from getting a standard mortgage with respect to taxes and insurance charges.
RMD: If you could do it all again…what would you change?
JT: Nothing, with respect to promoting and supporting the reverse mortgage concept. However, I would have pushed for additional options for seniors to escrow for taxes and insurance.
RMD: Tell us about your home base, Greensboro. What are the essential places to see?
JT: Greensboro is home of the international Civil Rights Museum, grown from the sit-ins back in 1960. It’s also home of the new ACC museum (for basketball fans) and it’s known as the furniture capital of the world. Go to the Undercurrent Restaurant, Print Works Restaurant and Green Valley Grill. Not to be missed.