The reverse mortgage industry as a whole has had to contend with a lot of structural changes in recent years, whether coming from the federal government in the form of mandated alterations to the Home Equity Conversion Mortgage (HECM) program, or just in terms of adapting to serve a wider swath of senior clientele who may not have ever considered the possibility of taking out a reverse mortgage before.
Financial issues among the American population of senior citizens are on the rise, as more people turn 62 while being required to find alternative sources of retirement funding as workplace pensions and retirement savings remain largely insufficient. Still, while trends in the financial situations of seniors seem to appear to be moving in the favor of the reverse mortgage industry, that’s not stopping the lenders themselves from seeking to find new ways to innovate and stay ahead of the curve in meeting the needs of seniors.
To that end, the following five reverse mortgage lenders are taking active steps to carve out a unique place in the larger reverse mortgage industry for an abundance of different reasons, which may make them worthy of continued attention as we continue to progress further into 2020.
Finance of America Reverse: Proprietary product development
While the larger reverse mortgage profession continues to increasingly favor proprietary, non-government sponsored reverse mortgage products, it’s difficult to ignore that one of the major leaders in terms of proprietary reverse mortgage product development continues to be Finance of America Reverse with its “HomeSafe” product suite.
HomeSafe is a ubiquitous brand in the proprietary reverse mortgage world, featuring no less than four different variations designed to meet specific borrower needs. In addition to the original HomeSafe Standard product, there is also “HomeSafe Flex,” which allows for more flexible draw of the loan’s proceeds. The company added “HomeSafe Second” soon afterward, the first-ever second-lien reverse mortgage, followed by the introduction of “HomeSafe Select” which is a proprietary Home Equity Line of Credit (HELOC) loan.
FAR has also recently expanded the reach of HomeSafe products to additional states, added line of credit growth and additional rate options to specific variations, and lowered the minimum age of eligibility to 60 on three of the four HomeSafe products.
VIP Mortgage: Volume up 50% year-over-year
Arizona-based lender VIP Mortgage may not be a lender that has cracked the top 10 rankings, but they are a lender that is on the move.
Based on full year 2019 endorsement data compiled by Reverse Market Insight (RMI), VIP Mortgage managed to grow its endorsement volume by 50% year-over-year, marking a very visible positive progression for the company especially when compared to the majority of the top lenders who saw general decreases in 2019 volume figures.
One of the paths that VIP has seen for its own growth is in a little-used reverse mortgage niche: HECM for Purchase, which has contributed significantly to the lender’s growth according to Tim Nelson, the head of VIP’s reverse mortgage division.
“The HECM for Purchase product is a huge opportunity,” Nelson told RMD in an October interview. “Realtors, builders and financial planners need to understand the concept because of the impact this product can make when creating liquidity versus tying up a large portion of their retirement assets and paying cash to avoid a mortgage payment.”
Longbridge Financial: Aiming to broaden proprietary space
Although FAR may be assuming something of a leadership position in the development of new proprietary reverse mortgage products, that’s not to say that other major lenders are sitting on the sidelines. In November of 2019, Longbridge Financial announced the availability of a new variation of its “Platinum” proprietary reverse mortgage product, featuring a line of credit (LOC) feature.
“Our new Platinum Line of Credit product is designed specifically to provide seniors the same flexibility, interest rates, and relatively low cost origination that comes with a HELOC, but has reverse mortgage benefits that are more aligned with a borrower’s financial needs during their retirement years,” Longbridge CEO Chris Mayer told RMD when the product was announced.
Mayer elaborated on the philosophy of introducing the product in a recent episode of The RMD Podcast, in which looking at the statistics of seniors taking up reverse mortgages compared with other products identified a clear need for a new approach.
“It’s a product I’m very proud of,” he said. “And it’s a product that took a lot of work, because what we’ve tried to do is to solve a problem […] by looking at what [seniors are] actually doing. We know that for every person that has an outstanding HECM, almost 11 have an outstanding HELOC for people in this demographic.”
That outnumbering ratio for HELOCs to reverse mortgages led Longbridge to ask serious questions about what it is that seniors are getting out of other products that they don’t feel they would get out of a reverse mortgage, and created a product to tailor to those needs.
“I will say the response has just been incredible, from both our retail team and the wholesale clients as well with people wanting to put this product out to bring it to their customers,” Mayer said. “The response to this […] almost seems like kind of an obvious product. And for us, this was not about looking at what is in the market today, but about asking what should be in the market.”
Open Mortgage: Betting on new technology
Texas-based lender Open Mortgage has been very present in reverse mortgage industry news lately due to its recent expansion efforts, an acquisition, and hiring practices. One of the ways that the company is aiming to set itself apart from its competitors in its business, however, is by focusing on new technological developments.
“[The] mortgage [industry] in general, we’re faced with changing technologies. We have been for years, but it really feels like it’s accelerating now,” said Scott Gordon, CEO of Open Mortgage in a recent episode of The RMD Podcast. “About A.I., and all these bots and little pieces of code that you can buy, or write. And in how you run your business, the engineering mindset helps when you’re deciding, should we use technology? Or, how will technology help us, or what balance do we want between people and technology?”
Gordon, who has a background in computer programming and engineering, sees technology as a major factor to help differentiate Open Mortgage from other players in the traditional and reverse mortgage business arenas. Among its recent acquisitions was Premier Home Mortgage, and Open also hired 50 former employees of shuttered lender Live Well Financial. Both the acquisition and the new hires will help in expanding Open’s technological footprint, Gordon said in an interview last year.
“Both Premier Home Mortgage and Live Well operated similarly to us in a technological and cultural standpoint, which is why they fit in so well with our existing operations,” he said at the time. “Live Well operated with a very user-friendly and education-based interface which will help us in our lending process. There are other technological advances in our pipeline that once completed, will greatly assist those in the reverse mortgage process from a digital standpoint.”
AAG: A new tone in advertising
In addition to being the number one reverse mortgage lender in the industry according to HECM volume data, American Advisors Group (AAG) is also one of the most clearly visible entities in the business because of its prominent advertising led by spokesman Tom Selleck. While Selleck has been the face of AAG’s reverse mortgage products for several years now, the company took a bit of a new approach in making the case for reverse mortgages based on its recent commercials.
One of the more recent television ads released by the company, titled “Reverse Your Thinking,” begins with Selleck addressing the audience to reassure them that his involvement with AAG would not be a reality if reverse mortgage products represented a threat to older Americans.
“This spot represents a bold new tone for AAG, with Tom Selleck setting the record straight about reverse mortgage loans,” an AAG spokesperson told RMD at the time the ad premiered.
“This isn’t my first rodeo,” Selleck says as the ad begins. “And let me tell you something: I wouldn’t be here if I thought reverse mortgages took advantage of any American senior. Or worse, that it was some way to take your home. It’s just a loan designed for older homeowners, and it’s helped over a million Americans.”
This ad was followed shortly thereafter by a new TV ad focused on AAG Advantage, the company’s proprietary reverse mortgage offering made possible through a correspondent partnership with FAR. This ad, the company said, was key to recharacterizing reverse mortgages in the eyes of the public beyond some of the more typical reputational trappings that have accompanied reverse mortgages for some time.
“The jumbo TV ad really represents the rebranding of the reverse mortgage product,” the spokesperson told RMD when the Advantage ad premiered. “It’s no longer a ‘needs-based’ loan, as it was during the financial crisis. In fact, the entire customer profile for the reverse mortgage has changed, and not just for proprietary products. Overall, for HECMs as well as proprietary jumbo loans, we’re seeing higher home values, higher credit scores, and very different use cases.”