How AAG Is Bucking The Trend in Reverse Mortgage Volume

While the rest of the reverse mortgage industry experiences an overall lackluster year for loan volume, American Advisors Group has submitted the highest volume of retail loans in company history.

In February, AAG posted 2,092 new reverse mortgage applications, breaking its previous high of 2,004 submissions in October 2014. In comparison, overall volume for the industry dipped 4% last month after remaining largely stagnant at the start of the year.

“A general assumption might be that we’re seeing an increase in our submissions activity due to the April deadline for the rollout of Financial Assessment,” Paul Fiore, AAG’s executive vice president of retail sales, tells RMD. “However, we don’t view FA as something negative that our borrowers need to ‘hurry up’ for. And certainly, we wouldn’t be seeing the results we have because of that.”

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Last week, the Department of Housing and Urban Development (HUD) released the new effective date for the Financial Assessment: April 27, 2015. While its effect on loan volume has yet to be determined for most lenders, AAG may already be experiencing some of its impact.

And, Fiore says, this positive impact will likely continue, contributing to increased loan volume for lenders in the long term.

“I anticipate that when FA is implemented, the industry may feel an initial adjustment — a slight decrease in loan activity — followed by an overall positive outcome leading into 2016, once the dust has settled,” he says.

As for 2015, AAG projects it will surpass its 2014 loan volumes and see an increase in overall funded loans from both its retail and wholesale channels. As the largest reverse mortgage lender in the country by volume, AAG recorded 13,287 total units in the 12 months trailing December 2014, according to Reverse Market Insight data.

To trump this total, AAG will look to its reverse mortgage advertising and marketing efforts, which the lender has previously attributed, in part, to its sales success. This year, Fiore says AAG will be ramping up these initiatives, working on new creative over the next couple of months as well as refining its messaging to increase the base of consumers who call.

“With FA coming, it’s important for AAG — and the industry as a whole — to tap into the retirement planning market,” he says. “We want to reach those borrowers who previously may not have thought of reverse mortgage, to reconsider.”

Last year, AAG launched a new reverse mortgage TV commercial featuring celebrity spokesman and former Sen. Fred Thompson, who advertised reverse mortgages as a retirement planning tool. And as the reverse mortgage becomes more accepted as such, lenders, including AAG, are seeing some changes in their consumer base.

“Our record-breaking February can be attributed to AAG’s continued growth on the sales floor and improved approach to selling to the wants-based (retirement planning) borrower segment,” Fiore says. “We’re seeing an uptick in these types of leads coming in on a daily basis.”

AAG plans to continue to train its sales force on the value the reverse mortgage brings to the consumer, and coach them in ways to work with new borrower and influencer segments, Fiore says.

Written by Emily Study

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  • Fiore once again reminds us that endorsements from a person most Americans view as a touch too conservative but very serious and reasonably genuine about what he endorses, may be the best way for a Top Ten lender to grow. It is clear that most recent endorsements from celebrities other than the Senator were generally received somewhat poorly.

    As an industry AAG can teach us much. AAG is taking full advantage of the positive environment in which they find themselves in a way no other lender seems to be able to match.

  • “However, we don’t view FA as something negative that our borrowers need to ‘hurry up’ for”… LOL. I can’t tell you how many emails I have been forwarded on your email blasts for pending FA.

    • I could not agree more. Not privy to “the numbers”, but I would bet AAG’s marketing budget – not just TV but their ubiquity on social media – exceeds that of the next 5 RM companies combined.
      This is NOT a bad thing – just demonstrates the results that can be gained in this market through brand familiarity, which AAG certainly has in spades over the rest of us.

    • treverse,

      You are correct that endorsement volume is much different than profits. Yet numbers tell the entire story. Using the words “profitable” and “budget” require numbers to be used to get “the whole story.”

      What does not give us the whole story are endorsement numbers. We need more, a lot more. One wonders if the increased endorsements are coming from homes which on the average have much lower values. Then there is the matter of cost.

      But could AAG be buying its growth? Remember how much Bank of America lost with its purchase of Seattle Reverse Mortgage, Walter with its purchase of RMS, MetLife Bank with its purchase of EverBank, Genworth with the purchase of the previous Liberty, and Ocwen with its current purchase of Liberty?

      The risk of loss from the campaign maybe a cheap way of gaining long-term market share. Put nothing past the long-term thinking of the directors of the AAG board.

  • I read the article and looked at all the comments. Many of the comments have valid points but if it were not for AAG the reverse mortgage would have very little national publicity and credibility.

    Another point is that the reverse mortgage has a very small share of the senior market. With out AAG our market penetration figures would look not only worse than they are but I would have think the industry would be concerned about the GNMA source hanging in there?

    John A. Smaldone

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