Call a HECM for Purchase (H4P) a “sleeping giant,” a vastly underutilized product—call it whatever you like. One full-service mortgage banker, however, is calling H4P the bulk of its reverse mortgage business.
An estimated 90% of the reverse mortgage business for Concord Mortgage Group is H4P, according to David Weinstein, senior loan officer and manager of the reverse mortgage division at Concord Mortgage Group, a Division of NOIC, Inc., a full-service mortgage banker in Westerville, Ohio.
Weinstein started the reverse mortgage division at Concord about 4-5 years ago, when the company began offering the product. Today, the lender currently offers HECMs to clients in eight states and Weinstein estimates that Concord originates roughly 75-100 H4P loans annually.
“Concord is, for the most part, a purchase shop,” Weinstein told RMD. “My domain focus is really on HECM for Purchase and my emphasis is continuing to educate the real estate community, builders and agents in the benefits of the H4P.”
A 26-year veteran of the mortgage industry, Weinstein has previously specialized in new construction lending for the last 15 years. It is this experience that allows him to approach reverse mortgage sales from a more holistic approach, especially when it comes to establishing relationships with regional homebuilders.
Most of the deals Weinstein works on involve new home construction. In fact, some of Concord’s homebuilder partners primarily build communities for buyers age 55 and older.
“By saying we’re going to focus on the product, meaning the house—that gets some doors open for us,” Weinstein said. “When we talk about how H4P can increase sales, that becomes a benefit because builders want to sell homes.”
Concord Mortgage Group offers a variety of different loan programs, including reverse mortgages, conventional loans, VA loans, Federal Housing Administration loans, conventional loans and jumbo products.
On the reverse side of the business, Weinstein has been primarily working with Epcon Communities, a Dublin, Ohio-based builder specializing in the age 55-plus market with properties across 19 states.
In efforts to best serve its customers, each Epcon Builder Partner selects locally preferred lenders that provide the most honest, viable and competitive financial solutions available. With the help of these partners, Epcon customers are equipped to choose financing options that best suit their needs, such as conventional mortgages, FHA/VA and HECM loans.
Weinstein has been working with Epcon for at least eight years now, almost as long as he has been living in Columbus, Ohio.
“Since their demographic has been primarily that Boomer client, through necessity we’ve been able to offer the H4P, which they have used for an unbelievable success,” Weinstein said.
When working with homebuilders, Weinstein explains to them the various positive reasons for why someone would get a reverse mortgage. He emphasizes that the H4P product allows the homebuyer to save their cash by requiring them to put down only a fraction of the home’s purchase price as a down payment, while also eliminating their monthly mortgage payment.
Since the inception of the H4P in 2009, endorsement volume for the product has yet to eclipse 4% of total HECM volume in any given fiscal year, according to HUD data. In Fiscal Year 2015, H4P represented just 3.94% of overall HECM endorsement volume, but this share has been progressively increasing every year since the product’s inception, when it accounted for only 0.48% of overall volume.
Despite this miniscule penetration rate, there are some originators across the country who have been successful in making H4P their sole focus. The keys to their success have been largely due to relationships established with home builders, real estate agents, financial planners, among other financial services professionals working with retirees and Baby Boomers.
For reverse mortgage originators looking to establish relationships with homebuilders in their areas, Weinstein suggests that when reaching out to contact builders, reinforce the benefit that H4P has not only for buyers but for builders as well.
“It [H4P] maintains values in communities because now there are no short sales; it allows buyers to add more options in the home because they are now paying 35-50 cents on the dollar; and it allows people who usually wouldn’t qualify for a loan to now get a loan to help generate sales in that market,” Weinstein said. “Those are among the three big things that I emphasize when I reach out to homebuilders, if nothing else.”
Written by Jason Oliva