Despite Market Uncertainty, Reverse Mortgage Lender Bullish on U.S. Expansion

The most recently proposed rule changes for reverse mortgages create uncertainty for the future of the industry, but that isn’t raising the alarm on one lender’s plans for a 47 state expansion this year.

That’s the plan for Tustin, Calif.-based New American Funding, which RMD learned last week is broadening its footprint in the reverse mortgage space with the aid of one of the industry’s prominent technology vendors.

New American Funding maintains a servicing portfolio of $14 billion and funds over $1 billion per month. As a whole, the company employs over 2,100 personnel across its nationwide branches.

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Last year, New American Funding finished 2015 with 109 Home Equity Conversion Mortgage endorsements, an increase of 63% compared to the previous full-year total, according to industry data tracked by Reverse Market Insight. Year-to-date through July 2016, the company reports 50 HECMs.

“We’ve been a slow growth, but a steady growth each year,” said Ellen Skaggs, reverse national production manager at New American Funding in Tustin, Calif.

On the reverse mortgage side of the business, New American Funding employs eight team members, including two loan officers the company recently added to handle the “multitude” of calls it receives related to reverse mortgages, Skaggs said.

“Our outside loan reps are getting asked about reverse mortgages and people are trying to find out what these changes to reverse mortgages have done,” she said.

The recently added personnel are currently in the process of obtaining licensing to do business in all of the states where New American Funding has a branch location.

“The volume of business that comes in is greater than one person can handle,” Skaggs said.

As the company expands its reverse mortgage operations, it plans to focus initially on hiring personnel to manage certain high volume regions, particularly in the Northeast, Northwest, Southeast and Texas markets. Eventually, the plan is for New American Funding to have a reverse mortgage presence in every state that the company is licensed to do business on the forward side, Skaggs said.

To aid in the expansion, New American Funding recently adopted ReverseVision’s RVX loan origination software. The technology enables New American Funding to integrate its existing loan origination system, as well as its enterprise customer relationship management (CRM) and lead management platform, into RVX.

Technology is critical for New American Funding’s reverse mortgage growth, since all of the company’s mail and other marketing campaigns come from its enterprise CRM system.

As incoming leads enter New American Funding’s CRM, they are automatically distributed to the appropriate branch. Borrower data from RVX is also shared with the company’s forward loan originators so lenders can use the system’s interface to conduct outreach with borrowers.

None of New American Funding’s forward mortgage originators, however, are allowed to originate reverse mortgages and vice versa for the company’s reverse personnel.

The timing of the expansion plans is interesting, considering the uncertainty posed by the Federal Housing Administration’s pending changes to the HECM program. New American Funding, however, isn’t going to let such market unknowns hinder its growth strategy.

“I don’t think any changes will impair us from doing business,” Skaggs said. “The [HECM] program has evolved radically in the last three years. The biggest change was Financial Assessment, but prior to that, it was the cutting of loan amounts. We survived all of those, and we’ll survive these changes and we will keep growing.”

Written by Jason Oliva

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  • I am very happy to see Jason coming out with announcements like this.

    In fact, I see this as a very positive move for our industry. I feel New American Funding has the right idea and most definitely has the vision for what the future holds.

    With all the negative talk about changes, low endorsements ETC., New American Funding is going against the grain, great move Ellen Skaggs and New American Funding. Their is a bright future out there!

    I hope this articles made a lot of people stand up and take notice!!

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

    • John,

      Plans for expansion are just that, plans. Should they get us excited? Most likely not unless our entity is expanding as well. Facts about HUD changes and endorsement volume are only negative to the extent a person sees or feels them to be.

      While I do not see a drop from 2 endorsements to just 1 in a single month as all that meaningful, it is much different when we see our volume drop from just over 114,000 endorsements for fiscal 2009 to the predicted under 50,000 for fiscal 2016. Most of the drop in the latter case is fact although two months are projected. In most industries, there would be much more discussion of how to turn that 50,000 number around next fiscal year. Where is that discussion in our industry? Instead of turning that detection to good, industry participants complain about being bothered since they like having their heads buried in the comforting sand.

      The comment I just read is a message of optimism coming from a fatalistic position of fear. What we need are not worn out ideas but fresh ones full of positivism but catering to the realistic. We have heard that with such and such a campaign we will have six times as much activity in five years than we do today. That was not idle talk 15 years ago but was three years ago.

      It is much harder to see this problem at the individual company level since endorsements can grow due to having more originators on board than in the period being compared. It could be the difference is due to a new company spokesperson which could easily be producing new endorsement activity for the industry. Without transparency (something I do not advocate for private companies), it is hard to know why a company is doing better than others over the same period of time, especially when the products being sold are so similar.

      The numbers are what they are. The proposed rules are what they are. So while we are enduring what James Veale calls downward secular stagnation in endorsement volume in a LinkedIn Post this week, we need to advocate new and fresh ways to disrupt that pattern. AAG is and has been moving forward, looking past the loss of Senator Thompson to the boost that Tom Selleck is providing them NOW but all of that took six months. The problem with much of what I am now reading is that originators are being pushed to do things like calling projection results, actual outcomes. It seems there is a push to give up integrity and trust with prospects and referral sources for immediate sales gratification. While that is most likely NOT the intention, the results are exactly the same.

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