Generation mortgage is making a play at reverse mortgage market growth through the launch of a new technology the company says will “reposition” reverse mortgages.
The new app planning tool, nu62(SM), shows the correlation of home equity amount to personal consumption to home equity credit line growth over any period of time in a person’s life after age 62, the company says, depicted graphically. The tool can be used by both loan originators and consumers how the loan can be used as a flexible financial resource.
“This is a different way of selling and planning reverse mortgages,” Generation President and CEO Colin Cushman told RMD. “We are presenting this in order to facilitate the mission of aging in place.”
The rollout of the new technology coincides with Federal Housing Administration reverse mortgage program changes that will suspend the popular fixed-rate standard reverse mortgage, Generation says.
“With the loss of the fixed standard, this assists in the education we want to [help senior homeowners] through an application for heirs and borrowers,” Cushman said.
With a strong focus on the adjustable rate reverse mortgage option and the credit line growth benefit it offers, the company hopes nu62(SM) will help to change the product’s perception among potential borrowers by showing those benefits over time.
“Reverse mortgages were always positioned to give all eligible homeowners aged 62 and over an opportunity to tap into the available equity in their home as a financial resource,” Cushman told attendees of the National Reverse Mortgage Lenders Association conference this week in New York City. “With the arrival of the closed-end Home Equity Conversion Mortgage (HECM) in 2009, came the trend for a one-time full draw. It was clearly suited for people that had more immediate cash needs.”
The shifting product options, however, have led Generation to develop the technology with an eye toward explaining those options in an understandable way.
“The way we are presenting reverse mortgages now shows that seniors can plan their consumption either all at once or over time depending on their plan,” Cushman said. “nu62(SM)” shows brokers and borrowers both the risks and rewards of different consumption patterns. It makes the options transparent and easy to understand for the first time ever.”
The technology will be available to the industry this year.
Written by Elizabeth Ecker