Reverse Mortgage Pull Through Rates Not Equal by Lender, But Why?

Were the big banks better at closing reverse mortgage loans? Not exactly, but data shows the lenders that recently left the industry had a higher percentage of loans that made it from case number assignment to close.

Pull through rates, or the rate at which a potential reverse mortgage borrower receives a case number and then ultimately closes a loan have decreased over time, with several different potential causes including falling appraisals and increased counseling protocols. But looking to the lender level may shed more light on the issue.

After introduction of the Financial Interview Tool to reverse mortgage counseling there has been some speculation as to whether counseling changes or lower-than-expected appraisals have led to lower pull through.


Chart: Pull through rates


Pull through rates

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While there is a small change noted pre- and post-FIT, a Department of Housing and Urban Development representative told attendees of the recent National Reverse Mortgage Lenders Association meeting in New York, at a decline from about 74% to 71%, the lender exits indicate more of an impact on the industry average.

All lenders are not alike, and the data shared by HUD showed pull through by lender had some discrepancies. Including recently departed lenders Wells Fargo and Bank of America, the data showed the average pull through on lenders that had exited at an average of 79%. Yet for the surviving lenders the average rate drops to 67%.

And among those remaining lenders the range falls between 53% and 75% pull through. So what might cause this difference?

One possible cause could be the policies some lenders have with regard to the application, including the timing of the process with regard to counseling, and what goes on pre-application.

Austin, Texas-based Reverse Mortgage USA, which has a pull through rate that is higher than average for top-10 lenders, according to data from Reverse Market Insight, uses a pre-application checklist to which it attributes its high level of pull through.

“A few years ago, we noticed that one of our loan officers had a pull through rate of about 93%—higher than the rest of our loan officers,” says John Mitchell, company founder. “We asked: why is that happening? She taught us what she was doing, and we were able to systemize a pre application checklist.”

The checklist, which features 10-15 different questions, is a way to target anything that could potentially go wrong, and flesh it out on the front end rather than later, Mitchell says.

“Are there title issues? Are there major repairs that need to be done? Who are the decision makers? We ask these questions all at once rather than having to address them later,” he says.

The company has implemented the checklist, which requires a loan officer’s signature before the application is taken. It has led directly to improved pull through.

“It really improved the process,” Mitchell says.

Written by Elizabeth Ecker

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    • Hummm … the training I received was worthless – I didn’t learn anything about Reverse Mortgages.  However, the folks in my class that came from Wells Fargo said Wells had a terrific training program.

  • I’ve created those sorts of checklists wherever I have worked, and the company reaction has been more along the lines of, “Why are you spending time doing this?” than “Thanks, this will help!” 

  • My first employer just wanted applications completed.  Our processors worked on whatever came in trying to get them to closing.  If someone got 90% of their prospects to sign apps, they were heroes.  Those who came back with nothing were wasting everyone’s time.  Of course those who got the high percentage of apps had horrible pull through rates while those with much lower apps to appointment ratios usually had higher overall pull through rates on the apps they took.  The owner believed that app volume produced more overall closings than fewer apps but with better pull through rates.  

    And so the battle wages to this day.

  • Raymond: I guess I should have been more explicit. I worked for one of the larger lenders and it wasn’t so much the initial one week training where you usually retain about 5% of the subject matter.

    It was really the ongoing training and support that helped me excel and become a top performer.

    I agree with Cynic where some of the smaller companies just wanted apps in the door and would hire anyone since most didn’t provide any real training or others benefits..

    I have seen many originators jump through the hoops with smaller lenders and after a few years have quite a few lenders on their resumes.

    Most never originated more than one or two loans a month if that.,

  • While I don’t believe the pre-application checklist would solve all problems that may ultimately result in an adverse action, it certainly seems that it would help to make us aware of more potential problems.  I have always said that a good offense is the best defense. Identifying specific areas that need special attention at the fore could arm us sufficiently enough to either withdraw before the application if the problem is insurmountable, or resolve issues up front so that we can successfully close the loan. One of our branch loan officers brought this post to my attention yesterday and we have already begun implementing a pre-app checklist.

  • I know for myself, I always ask those questions upfront.  It helps to make the process much easier for everyone involved.  You ask the right questions in beginning and it not only speeds up processing but also let you know of problems that could possibly kill the deal later.  

  • The training I got from American Guaranty Mortgage was great.  But I think it was my trainer – a guy from Denver – and not the program as a whole.

  • There are some interesting statements in this thread.  

    There seems to be an underlying theme that somehow in someway originators can decide if an application should be accepted.  Although an originator should discuss acceptance with prospects, it is up to the lender to accept or decline the application itself.  However, an originator should note any concerns about an application to processing, underwriting, and management. 

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