While the total number of reverse mortgage industry professionals present at HW Annual in Frisco, Tex. this past September was minimal in comparison with the numbers of forward mortgage lenders and vendors, one C-level executive of a major mortgage company devoted some of her time on a panel at the event to discussing the importance of reverse mortgages to a fully and diverse product suite.
Kathryn Amor, chief product officer at Finance of America Companies, spoke during the event’s mortgage purchase market panel about what Finance of America Reverse (FAR) beings to the table for the larger parent company. To dive deeper into the relationship between FAR and its parent company, RMD sat down with Amor to get a better idea of what the reverse mortgage division and its products bring to the proverbial table of the larger organization.
An ‘important’ component to product diversity, smaller does not always mean ‘niche’
When asked specifically what reverse adds to the larger Finance of America organization, Amor described a product category with a unique feature set that allows the larger company to demonstrate how comprehensive it can be as a provider of different kinds of mortgage solutions.
“Reverse mortgages are an important product within Finance of America’s diverse range of flexible, end-to-end consumer lending solutions spanning the entire home financing and home equity spectrum,” she explains. “They complement offerings at our Finance of America Mortgage and Finance of America Commercial businesses and, more broadly through Finance of America Reverse, bring increasingly important and flexible alternative financing options to our discussions with customers along their financial journeys.”
Part of the reason that the company remains committed to reverse is because of demographic and borrower trends, and both of these components indicate to FOA that reverse mortgages are not only potentially effective for seniors, but they’re also uniquely suited to meet the needs of seniors who continue to face a retirement funding crisis.
“We look at market dynamics and lending through a long lens and aim to develop and deliver innovative products that we believe meet an evolving set of consumer financing needs at various stages of life and throughout changing economic cycles and borrowing conditions,” she says. “Our belief is that as interest rates rise, borrowing will get more difficult and expensive, limiting many consumers’ access to financing. Our aim at Finance of America is to be a trusted, reliable partner to consumers who is always available to them regardless of market conditions to provide suitable products and sound counsel that meets their specific needs.”
Amor is also quick to point out that smaller reverse mortgage volume figures in comparison to the forward side does not necessarily mean that reverse mortgages are a “niche” product offering, while also offering that a desire to be comprehensive in the mortgage lending space necessitates having a reverse offering of some kind.
“Reverse mortgages have been part of our lending solutions toolkit since our founding,” she says. “And in our opinion, no balanced product strategy is complete without it. Reverse mortgages are a key component of our diversification and a critical product offering that helps us provide customers with a more complete set of financing alternatives. I guess you can say reverse is in our DNA.”
Reverse mortgages and the purchase market
When it comes to serving any mortgage customer at or over the age of 55, Amor says that leaving out a reverse mortgage option of any kind has the potential to make for an incomplete process. Whether through FHA-backed or proprietary loan options, the amount of features available with both products have the potential to meet the needs of seniors more efficiently than strictly forward-facing mortgage options.
“Finance of America Reverse offers innovative solutions that our industry needs to help older Americans fulfill their retirement dreams through the sound use of home equity to finance their non-working years,” she says. “FAR is a leader in reverse mortgage product innovation and employs a thoughtful mix of ingenuity, technology and education to develop and deliver retirement solutions well in advance of market needs.”
Older homeowners who may be looking for a new home may also run into the roadblocks that accompany the cohort’s collective financial difficulties, but reverse mortgage product options may present a solution for homeowners who find themselves in that situation, she says.
“We know that many aging homeowners haven’t saved enough to have financial flexibility in retirement and are carrying tremendous amounts of debt, which is making their ability to secure financing through traditional products very difficult and expensive,” she says. “At the same time the equity in their homes continues to grow. Reverse mortgages are an eloquent, alternative way to tap into that equity and provide many seniors with financing to be able to retire in their home.”
Product education and the necessity to connect
Still, echoing the concerns of many in the reverse mortgage industry, Amor points out the ongoing issues related to product awareness and borrower education of reverse mortgage products and obligations.
“One of the biggest gating factors between older Americans and financial flexibility in retirement is awareness of reverse mortgages and an understanding that it is a safe, sound financing tool,” she says. “This is why education is the centerpiece of FAR’s mission. People have not been made fully aware of all the flexible options including reverse mortgages, that are available to today’s modern borrower or they have preconceived notions based on dated or wrong information about legacy reverse mortgage industry products.”
This extends to a lack of awareness around reverse mortgage options which are not backed by FHA, such as proprietary reverse mortgage products offered by FAR and other major lenders. One of the ways that FOA hopes to change that is through the availability of the hybrid forward-reverse product offering, EquityAvail, announced earlier this year.
“It is a first-of-its-kind hybrid product that combines aspects of traditional and reverse mortgages to deliver greater optionality for homeowners at or near retirement – which we refer to as ‘pre-tirement’ – and helps improve cash flow and financial stability while better preparing them to handle unexpected expenses,” she says.
In terms of ways in which the company and the broader reverse mortgage industry can address concerns related to education and the proliferation of accurate product information, Amor describes the necessity to keep up national efforts to broaden consumers’ knowledgebase around lending later in life.
“This is a critical time in our history, where a holistic approach to retirement planning and access to alternative financing products that leverage the responsible use of home equity are a necessary complement to existing retirement efforts, especially if we intend to adequately support the growing segment of individuals at or near retirement age,” she says. “Whether rising costs of health care, our lengthening lifespans, or shrinking benefit plans like pensions, many Americans simply do not have enough money to afford retirement.”
Look for additional perspective from Kathryn Amor soon.