‘Generational Lending’ Takes Focus as Key to Reverse Mortgage Growth

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.

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“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

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  • I am a personal believer in professional specialization. I have yet to meet a lender who offers “all things to all borrowers” who does a truly good job at all of them…sometimes ANY of them.

    In those cases it is usually the reverse mortgage offering that suffers – not in terms of volume but execution – and that comes at the expense of the borrower who it poorly served.

    • Amen, but I would change “lender” to “originator” in your second sentence. I often hear forward originators talk about dabbling in reverse and having such a tough time with it, that they are happy to refer out the business. There’s too much going on in each market to be competent at both. It’s unfortunate that the behavior is encouraged, because as you said, the borrower suffers (and so does the industry reputation).

      When it comes to lenders, I completely understand the need to have a team of each, particularly with where the HECM market is headed.

      • I whole-heartedly accept your substitution of terms. I think, however, that a lender combining loan products should keep their processing of reverse loans completely separate as well.

        It will be interesting to see if AAG sets up a separate processing operation in support of their new forward originations, or just channels them into their existing ops group.

  • Specialization has its place. Lenders need to expand but do originators? Some will argue that a shrinking pie requires originators to broader their offerings but is such the case? Certainly the reverse mortgage is and will be more competitive but does that mean that offering a different line of products is the answer?

    Some argue that they can create modified HECM amortization schedules and chew gum at the same time and no doubt that is true. While blogging or responding to messages and email, I follow the market with the television on mute.

    Yet to the public there is value in specialization. A GP MD will not draw patients to provide cancer surgery or radiation treatment. The same is true of cardiologists and consumers needing back surgery.

    None of this new, except for a third party software committing to creating a platform which will do types of loans.

  • Good morning all,

    Generational lending is a good idea. Having the children involved (if the elder wishes it) is a very good thing. It helps to prepare them for the future and what to expect. While I too like specialists, it does not mean that the specialist cannot have a trusted friend or to send the children to for a forward mortgage. Just as many in the industry suggest working with financial advisors does not mean that people cannot work with forward mortgage originators as well. Having a full set of professionals to work with is a useful things to your customers.

    Frank J. Kautz, II
    Staff Attorney

    Community Service Network, Inc.
    52 Broadway
    Stoneham, MA 02180
    (781) 438-1977
    (781) 438-6037 fax
    [email protected]

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