Lenders Shift from Kitchen Table, Adapt to New Reverse Mortgage Landscape

Lenders may be moving away from the kitchen table model of originating reverse mortgages, and they are getting used to a new way of doing things without big, national banks in the mix. Looking back over recent months, Reverse Market Insight took a look this week into those shifts, as well as several others that have emerged. 

Highlighting three trends in reverse mortgages to date, RMI reported Tuesday on the state of the industry from several different perspectives.

New products are here to stay, enabling the market to serve different types of reverse mortgage borrowers, RMI writes. Previously, just one, standard product served senior borrowers. Today, the Saver helps borrowers looking to meet financial planning needs and the HECM Purchase allows borrowers to purchase a new home with a reverse mortgage. 

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Fixed rate reverse mortgages have comprised 2/3 or more of total volume for more than two years; a change that happened in less than six months, RMI writes.

But another, more recent trend has emerged in the wake of several large lenders having exited the business: a move away from the kitchen table method of originating reverse mortgage loans.

“Where this business was once powered by “kitchen table” salespeople at  Wells Fargo, Bank of America, Metlife and Financial Freedom, we saw 2 of the top 3 lenders in March were independent reverse mortgage lenders exclusively originating through their call centers,” RMI writes. 

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Above all, however, RMI notes the decline in volume the industry has experienced in recent months, and is likely to continue to see through the sustained downturn in home prices. 

“This volume decline is not groundbreaking news to anyone since we’ve been reporting on it for years now, but it does highlight the need for everyone to adapt,” RMI says. 

View the full report from Reverse Market Insight.  

Written by Elizabeth Ecker

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  • The drop in business is due to the changes in counseling program. Get rid of the counseling which is an insult to seniors and the business will increase. To many kings spoil the business.

    • Hello JGrassman,

      As much as I hate to say it, you are right, do away with the counseling and business will increase.  However, so will fraud, equity stripping, law suits.  Counseling should never be an insult to seniors, it is a chance to sit down with a neutral third party who does not care whether or not the senior takes a reverse mortgage or not who can both answer questions and make sure the senior has all of the necessary facts.  No matter how much any salesperson just tries to lay out the facts, ultimately the salesperson gets paid for selling a loan.  Counselors do not.

      To be perfectly honest, I personally think everyone should go through at least some counseling before taking out any loan.  Even if it is just a pro forma, “do you know how you are going to pay this loan back?”  Imagine what our economy would look like today if everyone who had to go through a refinance in the 90’s and early 2000’s had to see a counselor first?  Or just had to see one to be able to purchase the property?  If there was someone there to at least make them stop and think about the consequences of a stated income loan, would most have still taken it?  Maybe, but it would have protected all of us and particularly them from some of the worst of the abuses.  Too many people willingly suspended their disbelief about their ability to pay back a loan based upon what they were being told by realtors, brokers, friends and family.

      The result now is not just the law suits that are out there, but a distrust of our financial industry and a major hit to our economy.  Was counseling the silver bullet that could have prevented it?  No, it was and is not, however, it is something that might have helped to reduce the severity and at least some of the individual consequences of the economic downturn.

      Frank J. Kautz, II
      Staff Attorney

      Community Service Network, Inc.
      52 Broadway
      Stoneham, MA 02180
      (781) 438-1977
      (781) 438-6037 fax
      FrankKautz@csninc.org –work
      Frank@Kautzlaw.com –private

    • rmld,

      You may honestly believe what you wrote but that is only true for a segment of the senior population.  I have met many seniors who would not do business with anyone they could not stare in the eye and feel their hand when they shock it.

  • The Critic brought up a good point, is it more profitable to get away from the kitchen table and originate from the phone or call center?

    Interesting but this is what is happening, a major shift away from the personal touch and hands on service. We once enjoyed siting face to face with our seniors, joining them in a cup of coffee and establish friendships. This is how I grew up in the reverse mortgage business, this is what I loved about it.

    I am one that feels it is a sad thing to see happening. Our seniors need to establish trust in us more than ever. The shift away from the kitchen table does not help the environment any.

    Are we making a big mistake by making this change? Are we seeing the beginning of an end by shifting away from the values and principles we once established by getting into the reverse mortgage arena? What are we evolving into?

    Could some of the reason for business dropping so is because we are not giving that personalized hand holding service our senior clients relied on and needed from us? We need to evaluate our position and our market, we need to evaluate how we are approaching origination!

    I am not saying to do away with the call center concept but I am saying, let us not do away with the kitchen table either. The kitchen table is to important in our equation for doing business and taking care of our seniors the way they deserve to be taken care of!

    John A. Smaldone
    http://www.hanover-financial.com

  • I have worked for the big banks and small companies.  I sit at the kitchen table and do face to face meetings and applications and have for the past 16 years.  It is just as important now as it was before for that personal contact.  Just because the big banks are gone, there is no reason for me to change my way of doing business.

  • jgrassman,

    How is eliminating counseling going to effect kitchen table vs. call center origination and overall production? Your statement was a little confusing to me, so please enlighten us. I would really like to hear your position.

  • With all the regulations this industry has, and with more to come, in order to “protect” the borrower my question is , why is it OK to send a senior a stack of papers with stickers that say “sign here”?

  • I think the major problem is the same one that it was 20 years ago, the senior cannot walk into any bank and hear good things about a Reverse Mortgage, their bank does not offer them, and the only lender that sounds like they know what they are doing is the one on the phone..trust is the key to the equation, and going to the house does not solve all the problems in the industry.

  • I have been sitting at Kitchen Tables since I was 19 years old.  My algorythm is to actually cold call seniors.  Many of my clients find the over the phone model to be impersonal.  My service is very personal from start to finish maybe as much as 5 visits, but generaly a one call close.  The WW2 generation wants personal service.  I have had many clients tell me they will not do biuiness over the phone, and despite my cold call loved my credibility and experience.  There are many over the phone operations that use extremely deceptive practices.  I

    I find it unprofesional that when I do a refinance, fax a demand to the servicer, they then try to steal the case.  I ronically the servicer serviced for the former company and would have for the proposed company.  I have found companies that do televison advertising send unlicensed folks out to take the application, and have no experience in explaining this complex tool we call a Reverse Mortgage.  I do however know of a very successful one man show in Garden Grove, who is very credible and successful on the phone. 

    To all those Call Centers, I say thank you for adding to my Credibilty as a Canvasing Profesional, and a Kitchen Table guy.  I’ll be there to pick up after they have undermined the credibility of our industry.

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