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AAG Launches Reverse Mortgage for Purchase Partnership

American Advisors Group recently entered into a partnership with a nationwide real estate firm in an attempt to bolster its presence in the Home Equity Conversion Mortgage for Purchase landscape.

The Orange, Calif.-based industry heavyweight became an “approved” reverse mortgage lender for United Real Estate, a nationwide real estate franchise. As part of the arrangement, AAG will send representatives to United’s offices to host educational presentations on how older homebuyers can use a reverse mortgage to fund the transactions.

“The real estate industry as a whole has limited experience with HECM or reverse products,” a United Real Estate spokesperson said in an e-mail to RMD. “The industry is beginning to think about the possibility of using HECM for purchase transactions to gain more business.”

United pointed to the relative novelty of the reverse mortgage product in Texas as a particular area of growth; the Lone Star State was the last in the Union to legalize HECM products, a change that required an amendment to its state constitution back in 2000. To this end, AAG’s agents will start at United’s offices in the Dallas and Houston areas to educate agents about the HECM for purchase program.

“It’s also one of the top five states where baby boomers retire,” the United spokesperson said. “So while the climate may not have been right a few years ago, we believe it is now.”

In a release announcing the partnership, United president Peter Giese said boomers account for 43% of the firm’s total sellers, though he did not note the proportion of baby-boom purchasers.

“It’s critical to our growth, and to our ability to serve this large segment, that we are able to share the available tools to assist them through their real estate decision-making process,” Giese said in the statement.

Finding the secret sauce that makes the H4P transaction popular among both real estate agents and older buyers remains one of the most elusive quests in the reverse mortgage industry, and despite their tireless cheerleaders, they continue to only represent a small fraction of all HECM endorsements. Targeting agents and builders has been a common growth strategy, but progress has been slow.

While AAG consistently leads industrywide endorsement counts by a wide margin, the firm has lagged behind competitors in the HECM for Purchase space: According to data from Reverse Market Insight, AAG was in fourth place among all retail H4P lenders in 2016, closing 62 loans for a 2.7% market share. Retirement Funding Solutions was the runaway winner with 275, or an 11.9% share, followed by Reverse Mortgage Funding and Cherry Creek Mortgage.

In a statement e-mailed to RMD, AAG senior vice president of national field sales Jesse Allen said the firm will also seek to form partnerships with other decision-makers as part of the real estate outreach.

“We will share information around the important opportunity to collaborate with financial advisors/planners in working with customers who are evaluating choices around both existing home and new construction transactions,” Allen said.

Written by Alex Spanko