It’s becoming a familiar 2020 mantra: These are unprecedented times.
The coronavirus pandemic has thrown the world into a tailspin, and there’s no clear end in sight. It has affected nearly every industry and institution on the planet, including the reverse mortgage industry.
While originators are reporting a spike in borrower interest over the last 10 weeks, they’re also noticing a few other unexpected side effects due to the pandemic — and some positive surprises stemming from the crisis.
One pleasant surprise, according to Scott Harmes, national manager of C2 Reverse Mortgage in San Diego, is the increased level of borrower motivation and speed to close some loans.
“I’ve been doing mortgages for 38 years — and reverses, specifically, for 10 of those years,” he says. “The decision-making cycle on a reverse mortgage tends to be very slow, but since the pandemic, that cycle has been shortened up significantly. There’s a sense of urgency to get your ducks in a row.”
Harmes’ daughter Christina Harmes Hika, CRMP, C2 Reverse Mortgage, has also seen quicker closings as a result of COVID-19.
“Over the years, I’ve done a ton of proposals and lots of people just never decide,” she says. “Then something like this happens and they realize their portfolio is shaken a bit, then they remember how great the product can be. A reverse mortgage often follows a big life event like this.”
Christine Jensen, branch manager at Fairway Independent Mortgage Corp. in Arvada, Colo., says that she’s been surprised by her ability to walk her clients through their technological difficulties.
In many cases, prospective borrowers are isolated in their homes and are forced to lean on technology solutions to aid in communication, documentation and even the appraisal process.
“We work primarily with a demographic that’s not always technically savvy,” she says. “We’ve had to get creative about how we gather signatures, and I often start Zoom meetings with clients by giving them a short tutorial. Suddenly, tech support has become part of my job description.”
Younger borrower interest
The time to close has not been reduced for all, and technical difficulties and no face-to-face time has slowed the process down significantly for some borrowers, says Laurie MacNaughton, reverse mortgage consultant with Atlantic Coast Mortgage in Fairfax, Virginia.
“I’ve been mailing out applications, and talking through each page over the phone,” she says. “It’s definitely slowed things down a lot.”
But MacNaughton says she’s been surprised by an uptick in one demographic: younger borrowers — most in their 60s — who are calling her with questions.
And their level of preparation and information may bode well for new originations in the near term.
“Not only are they younger, but they’re hyper-informed,” she says. “People of all ages are just worried and trying to safeguard against the unknown.”
Written by Meredith Landry