Historically a niche market with many specialized lenders, the reverse mortgage industry is experiencing new challenges to growth in the form of regulatory changes and other market factors. Despite an undisputed surge in the prospective borrower demographic in the coming years, lenders are seeking new ways to tap into this potential market.
One potential key to success: a relatively new term coined Generational Lending.
The concept was reintroduced this week by leaders from industry software provider ReverseVision during the company’s annual UserCon conference in San Diego. Attracting originators and other mortgage market participants both experienced and brand new to reverse mortgages, the conference opened by proposing new ways for loan originators to serve multiple generations by offering a full suite of products—geared both toward forward and reverse mortgage borrowers.
“If you have a borrower, why not meet them where they are in the borrowing spectrum?” said ReverseVision VP of Sales and Marketing Wendy Peel, of the concept.
The idea applies to originators whose former forward mortgage customers can benefit from a reverse mortgage later in life. Or, it can apply in a contrary scenario for reverse mortgage originators who may be able to gain customers in the adult children of reverse mortgage borrowers.
“If the adult kids are brought to the initial discussion, then the borrower passes away, who are they going to call? You,” said Bob Talpas, account manager for ReverseVision. “They have seen you build trust with the borrower. That’s generational lending. Maybe [the kids will want to keep the home] and will do the refi wth you.”
But there are also entire databases of customers of large banks and other mortgage companies that have prospective borrowers but do not offer reverse mortgages. In fact, many lenders are becoming more specialized and increasingly they are independent mortgage companies rather than banks.
According to recent survey research presented Wednesday by Jim Cameron, senior partner for mortgage consulting and research firm STRATMOR Group, 6% of reverse mortgage lenders are bank affiliated, compared with 49% of forward lenders. Most that offer reverse mortgage also offer forward mortgages, according to the findings, and among the forward home loans originated in 2016, thousands were for homeowners 62 or older—many of whom could have used a reverse mortgage more effectively to meet their goals.
“How do you handle the pressures?” Cameron asked of today’s lending environment. “Leverage forward resources. That’s easy to say and hard to do, but I think we will have to think along those lines.”
As the leading reverse mortgage origination software provider, ReverseVision is doing its part to approach the growth challenge head on. In discussing goals for the coming months and years, the company says it is working to enable generational lending and to expand on its products plan to meet the industry’s needs in terms of where it is going.
In addition to work on reporting framework, data security protections, faster document generation and expanded loan data import capability, ReverseVision’s product team says it is making updates with flexibility in mind.
“We want to make it easier to do reverse in the forward world,” said Amberlynn Frye, product manager for ReverseVision. “Borrowers heading into retirement want more choices, not less. We need to make sure more tools take into consideration both forward and reverse products.”
Written by Elizabeth Ecker