Reverse Mortgage Software Companies Report 2017 Influx

Companies that provide software services to the reverse mortgage industry have seen a boost in new users so far in 2017, providing an indication that there may be increasing interest in the products from traditional “forward” lenders.

The San Diego-based ReverseVision has added just under 500 brokers or new broker companies in 2017, according to vice president of sales and marketing Wendy Peel. Today, the 50 direct-user companies that have have licensed the software amount to double or triple the number seen in previous years, Peel said. And these users aren’t just doing one-offs; they’re actively attempting to learn about the products and incorporate them into their offerings.

“They’re already doing more loans than previous brokers,” Peel told RMD.

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Peel specifically pointed to the data regarding licensing figures, noting that firms must pay to license the software — indicating a deeper dedication to the reverse mortgage product.

Over at Bay Docs, president Megen Lawler says the number of users on its Reverse Express loan origination software has quadrupled, indicating a similar boost in broker demand for Home Equity Conversion Mortgages. And last month, Reverse Market Insight reported that the number of reverse mortgage originators increased by 23% during the year ended May 2017.

In search of “forward” momentum

At the time, RMI president John Lunde speculated that a stagnating forward refinance market had driven many traditional originators into the reverse mortgage space in search of volume. Jim Cameron, a senior partner at the mortgage advisory firm STRATMOR Group, told RMD that lenders around the country have told his company exactly that.

Employees at the Greenwood Village, Colo.-based STRATMOR meet with more than 100 lenders annually, and over the past year, many of them have discussed a desire to enter the HECM space amid rising interest rates and cooling demand for refinance transactions.

“When interest rates went up after the election, that side of the business declined,” Cameron said of traditional refinances. “So forward mortgage lenders had excess capacity and declining loan volumes and loan revenue, and that caused them to think: Well, gee, I’m pretty good at mortgages in general — let me look at diversifying into reverse.”

Forward lenders frequently cite favorable demographic trends, high levels of home equity, and seniors’ general desire to age in place as other reasons why they enter the HECM space, Cameron said.

But they also acknowledge the challenges that newcomers face to the industry — especially those used to generating quick commissions. Unlike with traditional mortgages, Cameron noted, HECMs generally take longer to originate due to counseling requirements and greater levels of family input.

“You’ve got to have enough of a pipeline and enough patience to deal with what is really a longer-term sales process,” Cameron said. “I think that goes against the grain of some salespeople. They’re driven by short-term cash commissions.”

Cameron also pointed to the upcoming changes to the reverse mortgage program on October 2 as potential challenges, predicting that the higher mortgage insurance premiums for some borrowers will lead to lower origination volume in general.

“While I stand by my statement that more people have talked about getting in, I think that there’s been some headwinds created by that,” Cameron said of the premium changes and smaller draw amounts. “I think we’re going to see lower industry volumes.”

Written by Alex Spanko

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  • While some in the industry complain about calling secular stagnation by the name that the so called American Keynes,
    Alvin Hansen, gave it, like Larry Summers, you see SECULAR STAGNATION almost everywhere you turn in business today (especially in this industry right now). The annual fiscal year endorsement pattern of peaks and valleys over the prior four years looks to continue into this fiscal year, and is very likely to continue in light of the changes that are expected to go into effect over the next thirty days.

    Unfortunately those who claim to encourage the use of facts complain the most about them when the use of facts
    does not work to their advantage.

  • I do agree, we are seeing a crossover and more forward loan originators are getting into or trying to get into the reverse mortgage space.

    This could be a good thing, on the other hand, it can be a bad thing! Those forward loan originators crossing over to make a quick change to capitalize on there market slow down and then hop back into it when things improve, do not help our seniors or our industry as a whole!

    We have seen so many changes over the past few years to our product, it is hard for us that are devoted to our seniors and our industry to keep up on everything! The last thing we need is the quick buck uneducated LO to come in and turn our world upside down!

    On the other hand, those that are making a change because they truly want to be part of the reverse mortgage world and those that have a passion for seniors, we welcome them with open arms!

    However, these individuals joining our space, even though they have the right intentions, must realize, they have to be educated thoroughly on our product, our regulations and how to work with the senior sector properly.

    If those individuals will realize this and put the time and effort in becoming properly educated, they have an excellent opportunity for success!!

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

    • John,

      I get you have mixed feelings but is your overall conclusion that the influx of new lenders and originators from the forward mortgage industry good or bad for the industry? It seems you are lost on this one.

      Some like me feel the timing could not be worse for the overall growth of the industry. As these new entrants experience far less financial reward than they anticipated, their discouragement could result in others delaying their entrance for years. After all most of these new entrants have a healthy investment in coming in this boutique industry.

      • Cynic,

        No I am not really lost on this one, yes I have mixed feeling, I always do with the unknown.

        I feel if we have the right characteristics in a forward loan originator cumming into our space, that could be a good thing.

        A good thing if they will take the time to learn what our world is all about and they have the passion for the senior citizen sector.

        My concern is that those LO’s, even though they understand the world of qualifying individuals for a risk, are they willing to spend the time necessary to learn our world properly?

        In short, they will have a rude awakening if they think they will enter our space and make a fortune from day one!

        I don’t know if I answered your question or not Cynic, your question was a good one, I hope I did not let you down with my answer??

        You and yours make it a great evening for yourselves.

        Thanks for all you do,

        John S.

      • John,

        In my view, new originators will not make a dime’s worth of difference in a drop year in endorsements in our current and what appears will be ongoing secular stagnation at least through fiscal 2018, if not fiscal 2019.

        Knowing that we will be in a continuing annual peak to valley endorsement pattern. We while this year was an up year, next year is now reinforced to be a down year with the introduction of Mortgagee Letter 2017-12, especially as lenders adjust to horribly lower annual revenues from HECMs.

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