Private alternatives to the government-insured Home Equity Conversion Mortgage (HECM) are becoming more popular — particularly for people with high-value properties — and have been seen by some in the reverse mortgage industry as a possible factor that could save the business from generally reduced volume, and the still-felt impact of October 2017’s changes to principal limit factors (PLFs).
In order to more ably grow the larger home equity conversion business, however, jumbo and proprietary alternatives need to become more widely available. The business recognizes this need, and intends to address it.
“This will be a great year for proprietary products, and I believe we’ll see substantial growth on new and different products,” said Chris Mayer, CEO of Longbridge Financial in a recent webinar hosted by RMD. “I expect us to continue to see real growth and more in proprietary over HECM products.”
Mayer continued, saying that in terms of Longbridge’s expansion plans, there’s an untapped potential market in territories that have simply never had these kinds of options available in the past.
“There are states who have not ever approved proprietary products in their whole history with reverse mortgages,” he said. “I think people will figure out how to offer them in some of the states. I think we’ll be able to make a better case about how these are good products for their citizens. I’m optimistic about geographic expansion.”
Proprietary expansion to New York and Massachusetts specifically is less likely in the near term as those states have more regulatory obstacles, but expansion to other states could be achievable.
“We have been continuing to add states, we are now in 14 states, with more coming shortly,” Mayer added in an email to RMD. “We are always looking for ways to improve the product offerings.”
In terms of the plans of other companies, expansion for proprietary offerings into new territories is seen as an investment in enhancing products they make available.
“At the moment we’re focused on maximizing our current suite of products, which includes expanding our Advantage jumbo reverse mortgage line into additional states,” an AAG spokesperson told RMD in an email.
Finance of America Reverse (FAR) also stated its intent to continue the expansion of its own proprietary offerings into new territories.
“FAR is actively working to continuously introduce new states to the HomeSafe product suite,” a FAR spokesperson told RMD in an email. “The ultimate goal is to expand the 23 states currently offered for the Original HomeSafe product to additional states and extend those states across all proprietary product iterations.”