Like other lenders in the market, The Federal Savings Bank has adapted to the new reverse mortgage lending landscape since the Home Equity Conversion Mortgage program changes hit in October 2017 — and they are looking to the future with a defined plan and goals.
Based in Chicago, The Federal Savings Bank has over 50 HECM originators throughout its 30 loan production offices nationwide. Currently ranked number 23 on the Reverse Market Insight’s HECM Lenders list, The Federal Savings Bank has funded reverse mortgages since the 1990s, but it was not until 2012 that the bank brought the process completely in-house. Since then, key connections and trusted team members have been the focus of the reverse division, says Michael Crossett, executive vice president.
Crossett says reverse mortgages continue to be a “kitchen table” product, requiring time and attention with the borrower. But as times have changed, so has the ideal borrower — and his team is looking beyond the common “needs-based” assumption.
“I think the biggest opportunity is with those who have a need but don’t realize they have a need because the problem is five to 10 years in the future,” he says.
To reach these borrowers, The Federal Savings Bank has gotten creative by establishing financial relationships outside of the industry.
“I think the opportunity to explode the business is to work with a trusted group of advisors — realtors, CPAs, financial planners, attorneys — the full suite of the trusted advisor team,” he said. “And working with that team to help clients who, by opening a HECM today, can help them achieve better outcomes in three, four, five years down the road — because they will have a need.”
Crossett says many times these financial advisors broach the subject of home equity and ways to use it in retirement, then bring The Federal Savings Bank into the conversation when reverse mortgages make sense for the client’s goals. Currently, the bank offers HECMs and all of the proprietary products on the market.
“If you have great personal and professional relationships with those advisors, and they clearly understand how you can help them and their clients achieve better outcomes in retirement, then you are going to help a lot of clients and have a lot of fun,” he says.
While they are seeing success with this approach, he says it definitely has not been easy.
“It’s actually been working very well, but you’ve got to get up every day and you have to work,” he says. “A lot of people are searching for the golden pill where the leads just fall out of the sky.”
In-house, The Federal Savings Bank has always focused on quality of originators and staff — and in the coming months Crossett intends to grow the team of the “highest caliber of originators.” For hires with no reverse mortgage experience or no mortgage banking experience at all, the bank offers a full training program.
As a bank that is licensed in all 50 states, these originators can lend in all 50 states, and Crossett says that gives them ultimate flexibility when it comes to getting personal referrals.
“We have the ability to help the family, the friends, the acquaintances,” he says.
While the industry still needs to regain equilibrium, Crossett reminds his colleagues that change is the nature of the beast, adding that the product and its uses must keep adapting to retirees’ changing needs.
“Look, in my opinion this channel will continue to see change — it’s inevitable,” he says. “If you’re in this channel of business and you’re expecting it to stay the same, reset your expectations.”
But for those committed to work for the product, Crossett says reverse mortgages are rife with possibilities, as 10,000 baby boomers turning 65 every day every day and most people have the bulk of their wealth tied up in home equity.
“There is tremendous opportunity to help so many people achieve a better retirement,” he says. “Stop worrying about what was and focus on the present and how many people we can truly help today.”
Written by Maggie Callahan