Alternative equity tapping company EasyKnock announced today the addition of a new product to its suite of offerings primarily designed to answer the additional needs of homeowners afflicted by financial difficulties stemming from the COVID-19 coronavirus pandemic, while also providing an update on its active partnerships with leading reverse mortgage lenders.
The new product, called “ReLEASE,” provides homeowners with the option to sell their home and rent it back from the company for a term of the customer’s choosing, citing the acceleration of mortgage forbearance agreements and a difficult economic climate stemming from the ongoing pandemic as reasons for introducing the new product.
New ‘ReLEASE’ product, features
With rising forbearance rates and the tightening of credit, EasyKnock’s newest product aims to give homeowners another option to leverage home equity for a variety of financial situations and claims that sale of a home under the new product can close in as little as seven days, for a “competitive” price, the company said in an announcement of the new offering.
“One of the things that’s changed is we’re going to see if we can work with people that are in forbearance,” says Jarred Kessler, CEO of EasyKnock in an interview with RMD. “We’re looking to work with people that are looking for a lifestyle choice in tapping their equity without having to move and really growing our partnerships in our technology.”
In terms of differences with its other core sale leaseback product offerings, ReLEASE operates on an accelerated timeline and does not contain some of the flexibility found in some of the company’s more longstanding offerings. The signature EasyKnock product, “Sell and Stay,” offers homeowners longer-term lease options and the opportunity to buy back their home if they so choose.
“With Sell and Stay, it’s a sequencing dynamic where you get a percentage — up to 70% — day one, and you get the rest when you sell it, or buy it back,” Kessler tells RMD. “So you’ll get the difference between the next sale price and the day one cash in Sell and Stay. With ReLEASE, if your house is worth $100,000, we’re going to pay you $100,000, and we hope you commit to at least a two year lease. That’s what we aim for, [but] it’s not a line in the sand.”
The second offering, “MoveAbility,” is designed to allow homeowners to leverage their equity in the purchase of a new home, prior to vacating the home they currently occupy. The equity in a borrower’s current home is released in as little as 13 days after selling the property to EasyKnock, which allows the client to stay in their home paying rent while figuring out how to make the move to their new home.
The additional urgency created by the pandemic means that ReLEASE is designed to emphasize speed, but that is also designed to draw a comparison with other products in the home equity space, Kessler says.
“We try to move as quickly as possible,” he says. “I would say that when we stress speed, I think we’re talking about [how] we can provide a lot more certainty than some of the alternative products out there. Because we’re not a lender and we’re a principal, we make the decision of buying the home. The money that someone gets, that’s just a benefit. So we can move quicker, and we have a lot more flexibility on the underwriting process than a traditional lender.”
Reverse mortgage partnerships during COVID-19
Kessler previously described that reverse mortgage product options may have lower associated costs when compared with EasyKnock’s offerings, and that a reverse mortgage is encouraged for a particular customer if it helps them to more efficiently meet their needs. In instances where a senior borrower may not qualify for a reverse mortgage, however, EasyKnock has established partnerships with a majority of the biggest lenders in the industry to pick up potential customers.
While that is still a core component of EasyKnock’s overarching home equity strategy, the focus on those partnerships was a bit derailed by the early instances of economic shock brought about by the pandemic. Now, though, those partnerships are being tended to again, Kessler says.
“From March to May, when things were really uncertain, we had a lot of good conversations with the leaders of all the different associations, and we were ready to help them,” Kessler says. “I think, to be frank, they were focused on their core competency, and we were [focused on ours as well]. Now those conversations are starting to come back a little bit, because it was really a function of distraction and pent up demand. Now, we’re returning to a relatively — and I want to stress relatively — normal period. So, those conversations, to be honest with you, are being revisited right now. But they got sidetracked by COVID.”
Kessler is also quick to re-emphasize that his company does not seek to compete with the reverse mortgage sector, since there is plenty of opportunity to work together to ensure that as many clients as possible are served in the event that they either do, or do not qualify for a reverse mortgage.
“We don’t view ourselves, necessarily, as ever competing with the reverse mortgage world,” Kessler says. “We view them as a partner that we can collaborate [with], because I think the reverse mortgage product is one of the best products out there. I think sometimes it gets a bad rap, and if someone can get it, they should get it. But, whether it’s about the amount of equity or whether it’s an age restriction, these loan officers see a lot of opportunities that we can help them monetize. And that’s always consistently what we’ve focused on with our brethren in the reverse mortgage space.”
Opportunities to expand reverse mortgage partnerships
The current situation with the pandemic likely gives EasyKnock an opportunity to collaborate further with existing reverse mortgage partners, while also offering up the chance to expand those partnerships to additional companies, he says.
“If someone is trafficking in a space where they’re constantly getting inquiries, and they can’t serve that person, the best thing they can do — which is ultimately going to help them — is refer them to us,” he says. “The beauty of EasyKnock is [that] our target market is not [made up of] senior citizens.”
However because of additional restrictions on the reverse mortgage space, that also makes those loans harder to close. In those instances where a customer can’t go through that process for one reason or another, EasyKnock sees itself as a ready and willing partner to capture that customer in order to offer them another option, Kessler says.
“We want to find ways to incentivize and partner with [reverse mortgage companies],” he says. “And they want to find ways to have a good experience even if they can’t help someone. I think that’s a win-win for both of us.”
EasyKnock’s new ReLEASE product is available now in Florida, Michigan, Arizona, Colorado, North Carolina, Tennessee, Utah, Texas and Georgia for qualified applicants.