How AAG is Capitalizing on Reverse Mortgage Growth [Sponsored]

As of 2019, annual reverse mortgage production is around 34,000 loans, which is a small fraction of the roughly 45 million seniors who currently reside in the country. These numbers are leading top-producer American Advisors Group (AAG) to look at expanding the market for reverse mortgages in some new and interesting ways.

“An emerging trend during this current market downturn is the popularity of the reverse mortgage line of credit option, which has fueled our need for growth,” says Melanie Parks, VP of National Field Sales for the West Coast at Irvine, Calif.-based AAG. “There’s a new wave of seniors that are proactively using their home equity in conjunction with their traditional retirement accounts to ease stress caused by market volatility.”

In order to optimize company resources, AAG is driving major growth across its National Field Sales (NFS) Team, says Parks, who has more than 17 years’ experience in the reverse mortgage industry.

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Why AAG is hiring now

AAG is the number 1 reverse mortgage lender in the country, according to Home Equity Conversion Mortgage (HECM) endorsement data, and they’re showing no signs of slowing down.

“There is a constant need for talented loan officers and sales leaders who want to expand their business,” says Shannon Robinson, VP of Strategic Sales and Execution at AAG. “During times like these, when employment is scarce across the county, we are creating an environment for reverse mortgage professionals to thrive. We provide unmatched marketing resources, brand recognition, and a self-generation business development platform to go along with our strong entrepreneurial-based culture.”

The growth trajectory is already under way. In 2019, AAG increased field sales production by more than 50% while “more than doubling” the volume funded by AAG’s proprietary Advantage product, and the company expects to keep that upward trend moving into 2020, Parks says. One of the commitments the company has made in order to continue its momentum is to increase its NFS Team headcount by more than 30%.

Looking forward

One of the ways that AAG is looking ahead in 2020 is in the way it plans to leverage the current historic low-interest-rate climate. While AAG Advantage volume has increased, the current low rates are also driving an increase in HECM volume.

“Every time rates fall, as they have in this current market, it creates more opportunities for seniors to obtain a reverse mortgage for which may not have previously qualified because they didn’t have enough equity,” Parks says. “From a field sales standpoint, we need to have nimble sales teams on the ground across all the territories to ensure we’re able to handle the influx of borrowers.”

Increased projections for HECM volume, coupled with the trending popularity of the line of credit option, has driven AAG to look at alternative ways to educate the public about the benefits of using home equity, including by working directly with professionals in other industries. The company has assembled a team of business development partners who actively travel the country educating financial professionals on how home equity can improve their clients’ retirements.

An industry standout

AAG aims for its consumer-driven approach to help lead and shape the future of the reverse mortgage industry. Because of that, the NFS team has become a business cornerstone due to its ability to enhance the agility of the company in meeting customers wherever they prefer to be, including in their own homes. That personal outreach is facilitated by strategic local business partnerships that allow the NFS team to consolidate and optimize its sales leads.

“From a business standpoint, our brand, marketing, business development, and customer service resources are unmatched in the industry and allow us to communicate with a large number of seniors and business partners without losing the personal touch,” Robinson says. “Being able to help more seniors than anyone else in the nation is what has consistently kept AAG the number one reverse mortgage lender in the country.”

To learn more about AAG and the company’s job opportunities, click here.

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  • Lenders seem focused on growth and talk about it as if the growth is coming from seniors who have never had a reverse mortgage and 1) were advised to do so by a financial adviser or attorney or 2) were curious on their own to find out reverse mortgages. Yet the largest segment of growth has nothing to do with new borrowers but rather existing HECM borrowers who are doing HECM Refis.

    As of mid fiscal year 2020, 72% of increased HECM endorsements come from HECM Refis. Over 79% of the increase in Case Number Assignments (CNAs) for February 2020 is coming from HECM Refis. Incredibly the growth in CNAs for the months of March and April 2020 is over 92% from HECM Refis. This means that HECM endorsement growth for the next three months is even more heavily dependent on HECM Refis. ln about three weeks HUD should post the CNA count for May 2020. If there is an increase in CNAs and that increase is primarily from HECM Refis, that could spell trouble for HECM endorsement growth in the second half of fiscal 2021 when there may be little growth in HECM refis.

    So what we are seeing is that the most volatile type of HECM — HECM Refis — are sparking current HECM endorsement growth. But is that growth sustainable?

    Who is it we are trying to fool with so much emphasis on anecdotes emphasizing growth in Traditional HECMs when actual numbers lie in wait for analysis? Perhaps they have been analyzed but have been put aside. Speculating why could lead to cynical conjectures.

    It is much easier to convince an existing borrower who qualifies to do a HECM Refi than to convince a qualified consumer who has never had a reverse mortgage before to do a Traditional HECM or an H4P. Without substantial growth in Traditional HECMs and H4Ps, we could easily drop back to under 35,000 total HECM endorsements in fiscal 2021, paving the way for a new round of HECM endorsement stagnation.

    As of now, the growth in Traditional HECMs could be limited to less 1,500 for fiscal year 2020, ending on September 30, 2020. (The growth from H4Ps could be less than 200 endorsements in fiscal 2020.) It is ironic to read so much electronic print dedicated to exciting the industry to what amounts to nothing more than substantial growth in HECM Refis especially when many industry participants are campaigning for the end of HECM Refis. If that were the case for fiscal 2020, total endorsements would be less 31,500 for the second year in a row!

    Let us not be such purists. HECM Refis are good for the industry and current HECM borrowers alike. Without HECM Refis, there is a high percentage of borrowers I have spoken with over the years (on a very unscientific basis) who would feel trapped by getting a HECM and question if they would have gotten one in the first place. As to increased losses in the MMIF from HECM Refis and investor dislike of them, both interests should probably take a backseat as to the need for HECM Refis.

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