Mortgage Professor Gets Into Reverse Mortgage Business

The “Mortgage Professor,” otherwise known Jack Guttentag, finance professor emeritus at Wharton School of Business, has made a foray into reverse mortgages via an online shopping resource for senior borrowers seeking reverse mortgage product information.

Guttentag, who has written extensively about reverse mortgages and has long advocated their use as a retirement solution, has developed an online calculator that compares different reverse mortgage products—by lender—for online shoppers. The site will receive a referral fee charged to the loan provider selected by the senior for the work done in helping the senior understand the product that best meets his or her needs.

“After [seniors] learn the rudiments, they may not understand the [reverse mortgage] implications down the road. One thing we focused on is showing them what is going to happen depending on the selection they are going to make,” Guttentag told RMD. “We show what happens to debt and the credit line for unused borrowing power… it’s not understood and is a very powerful feature when conditions can be different down the road.”

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While the site does not originate mortgages, it allows users to enter information and then select different calculators based on all of the different product options available. For example, users can see combined product choices such as Maximum Credit Line With Specified Monthly Tenure Payment or Maximum Tenure Payment with Specified Credit Line.

The calculator incorporates the best pricing available from the lenders it partners with. Currently, Guttentag is partnering with four lenders with others in process, he tells RMD.

The charge to the lenders, if selected, is $150.

“We have the only facility that allows seniors to compare different HECM options, including option combination such as cash withdrawal plus credit line. In making such comparisons, seniors can see not only the transaction features but also the implications for future changes in debt, credit lines, and modified credit lines – the latter are the lines a borrower can switch into from a payment plan,” Guttentag says. “We are constantly tweaking the program to make it simpler to use, but the fact is that HECMs are complicated and many if not most seniors using the program will need help, which we are there to provide.”

Editor’s note: The Mortgage Professor does not sell leads. Rather, the site charges the one loan provider selected by the senior for the work done in helping the senior understand, assess and select the HECM option that best meets their needs.

Visit the Mortgage Professor’s site.

Written by Elizabeth Ecker

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    • Thanks, you are right on about the purpose of the site. Lack of information about options is a major weakness of this market, and we are trying to fix it.

  • If this is a good idea, then HUD ought to sponsor it and make it available to all HUD-approved RM counselors for use when discussing RMs with potential clients.  I doubt that seniors interested in RMs are going to fork over $150.

  • Excellent Resource for getting the facts of the HECM program and what it can do in various situations.
    Jack Guttentag, is a well respected, knowledgeable professor finance who truly understands the value that HECM plans can provide seniors based on what they are trying to accomplish. Jeff Taylor, President Wendover Consultanting, Inc.

  • We have been receiving inquiries from loan officers who want to purchase RM leads from us, suggesting that we have not done a good job in distinguishing what we do from more typical lead gen operations.

    The usual practice is to collect information about potential borrowers and sell it to an originator, or to 2, 3 or 4 originators. We don’t do that. .

    We collect price information from participating lenders. Using the best of the prices, we calculate and display withdrawal amounts for the various HECM options and combination of options, including standard and saver versions of each. The intent is to guide the senior to the one option that best meets her needs, in the process displaying what she needs to know to make this decision, including what may happen in the future.

    The senior always has access to human help along the way. The questions we get in providing help are instrumental in the continued tweaking of our program to make it more user friendly. 

    When the senior has selected the HECM option, she can access the  list of participating lenders which shows the  price quoted by each lender for that option. Assuming she wishes to proceed by selecting a lender, her desired  HECM option and contact information are delivered to that lender. And only to that lender.

    •  Jack, no one questions your support of the industry and thank you.

       Do you also make it clear to the senior that if they proceed by picking a lender you are selling their information to that lender? Do you make it clear that some lender are “phone banks” and they may never see anyone face to face except the closing atty or closing notary? That they may end up speaking with someone 3K mile away and not someone local?

      • Re your first question, we don’t sell the senior’s information to the lender, rather we charge the lender for the services we offer the senior on their behalf. The senior selects the lender, and sends his information to the lender. This is not a semantic quibble, those in the business of selling borrower information can sell it to any number of  lenders, whereas we can charge only one lender.

        Re your second question, the senior has access to whatever information our loan providerts want to provide about themselves, including the quality of their service and where it is offered. But note that the senior who uses our system is not dependent on the lender for guidance and counsel because they get that from us.  .  

    • The calculators are great. My only issue with the site is that the pricing from the limited number of lenders participating is clearly not the ‘best’ available in the marketplace. Given the nature of the site – not a ‘lead generator’ – and your reputation, I believe there should be a clear disclaimer to the effect that prices quoted are NOT the best available, and in fact may be considerably higher than best available.

    • Thomas,

      There are three basic rules when it comes to real estate:  Location, location, location.  Knowing something about state trends, county trends, and even city trends is one thing but knowing community trends is quite another.

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