The RMD Podcast #12: Steven Sless of PRMI

The RMD Podcast returns during the COVID-19 coronavirus pandemic, and RMD Editor Chris Clow is joined by Steven Sless, reverse mortgage division manager with Primary Residential Mortgage, Inc. (PRMI) and branch manager with the lender’s Steven J. Sless Group, to discuss in greater detail what challenges and opportunities reverse mortgage originators are facing in the midst of these unusual times.

Reverse mortgage professionals are used to conducting business in a very consultative fashion, guiding borrowers carefully through a complex but potentially effective financial instrument. However, social distancing and virus mitigation guidelines provide some restriction to the consultative process, but this moment may also present some opportunities for those looking for additional financial options during a moment of economic stress.

Listen to this episode of The RMD Podcast to learn:

  • What effects the pandemic is having on “boots-on-the-ground” originators
  • How proprietary products are playing an expanded role
  • Elements of a reverse mortgage transaction streamlined by technology
  • The importance of checking in with clients who may feel isolated during these times
  • And more!

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  • When Steven talks about doing well despite the pandemic, it seems the industry is in the condition. The pleasant surprise of March was that it had the highest volume of case number assignments (CNAs) in the last 30 months, i.e., since September 2017. In other time terminology it is the highest monthly total in a quarter of a decade.

    March 2020 was the highest total for any March in the last three years. It was 20% better than the CNA total for February 2020 and 27% larger than the CNA total for March 2019. In fact, this is the ninth straight month of case number assignments being greater the same month last year. Those percentages are impressive.

    While 5,657 is no apex for the industry, it shows that the general population shutdown did not interfere with reverse mortgage originators finding ways to get get new applications into the pipeline through counseling and case number assignment. As said at other less positive times, reverse mortgage originators are a resilient lot. This despite the pricing issues the industry has been struggling with recently.

    Having been associated with the industry for almost sixteen years, the first four years were years of phenomenal growth with the next two years being a kind of rising plateau with three sharp fiscal years of decline. For HECM endorsements, fiscal 2020 is the start of either another six years of stagnation like fiscal years 2013-2018 or it is the start of a period of new growth. So the overwhelming expectation is that fiscal 2020 could see growth in HECM endorsements as high as 20% and without doubt a year of growth (or upswing) even if it is that growth is less than 20%,, although it appears that proprietary reverse mortgage (PRM) origination will be in decline for this fiscal year with one major originating lender leaving the industry thus ending its PRM and others modifying their products due to the squeeze on the spread in yield rates.

    This pandemic is rather unusual. It is not the horrific pandemic of the fall or 1918 formally referred to as the Spanish Flu (more appropriately referred to as the Kansas flu). Yet the world has never experienced the vast majority of the industrial nations going into some form of social distancing. Combined with the oil crisis, we are living in a time like no other. Predictions of life after Covid-19 are either irrational or very vague. Yet one thing is true in our industry is a push to be more than ever predominately online.

    As to PRMs, neither Maryland or Minnesota are places where they can be originated. To understand the present trend in PRMs, the place to come is, as usual, California. To understand PRMs, one must first understand that they are only 2 types. For years the industry had a product known as Home Keepers which were in the right circumstances were very competitive with HECMs. Here in California we were placing these reverse mortgages on coops within a very large senior residential development until shortly before the last quarter of 2008 when Fannie Mae terminated the origination of Home Keepers due to the changes made to HECMs in HERA that made the benefits of both products too similar.

    Jumbo PRMs on the other hand were special. Not only were there fixed rate PRMs but we had a wide variety of adjustable rate PRMs that were very similar to the adjustable rate HECM even down to growing lines of credit. They came in handy in many communities in Southern California and the San Francisco Bay area.

    You were a great interviewer and Steven made a great presentation regarding his firm for those originating reverse mortgages in states like Maryland and Minnesota but not in places like California.

    Chris, you need to take your podcast out West where one watches the sun set over the grand Pacific Ocean, the great air conditioner for much of the population on the West Coast. Give a ring to Reza, Torrey, or other Big Ten lenders headquartered out here. Things are a little different out on the Pacific Coast region. I am looking forward to those interviews as well.

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