Multi-channel mortgage lender Guaranteed Rate recently announced it is expanding its presence in the reverse mortgage business, with a focus on the Home Equity Conversion Mortgage (HECM) for Purchase (H4P) product in particular.
A well-established forward lender, Guaranteed Rate has been offering HECMs for years. And, the lender’s growing interest in the reverse space is happening at a time of change for the industry, as lender exits and consolidations are carving out a new landscape.
RMD recently sat down with the company’s EVP of operations, Jim Hettinger, to learn why the company is opting to expand its presence right now in the reverse mortgage space.
Demographics, retirement readiness
According to Hettinger, expanding the lender’s presence in the reverse space made sense due to both industry and demographic trends as well as company interest.
“This expansion is really something that our VPs of lending have asked for, but it’s also a product that’s becoming more necessary,” Hettinger said. “Just earlier in the month, another report came out stating that only 24% of Americans entering that retirement age feel that they have enough [money] to retire comfortably.”
That same report showed a decline in retirement confidence with younger cohorts — while senior-held home equity has reached historic levels, Hettinger said.
“The HECM product is something that [has become] a necessary part of the environment we have now, and honestly something I feel should be in every conversation with people when discussing retirement planning,” he said.
The reverse mortgage expansion announcement was largely focused on the H4P product, which has had a hard time catching on with seniors and industry professionals. Still, Hettinger believes that H4P i has a lot of utility for seniors.
“Guaranteed Rate was built on establishing really close ties with our real estate agent partners,” he said. “We’ve always been a big purchase shop. So those referrals, building that business and certainly focusing on the highest level of service to our borrowers is of paramount importance. And I think as you’re alluding, H4P is a huge opportunity, but I think the HECM product is something here that we can see as a financial vehicle for all of our referral departments.”
The company values and maintains good relationships with builders, financial advisors and real estate agents, and this reverse mortgage expansion will help extend its educational efforts to those partners.
Specialization vs. product adoption
When asked about whether the plan is to bring more dedicated reverse mortgage staff aboard or train existing staff to incorporate reverse into their offerings, Hettinger said the company hopes to do both.
“We have the best forward loan officers in the country,” he said. “So, we want to make sure that we’re engaging with that team to ensure this product is really offered as an alternative to forward products whenever an appropriate purchase [presents itself].”
If a forward loan officer at the company expresses interest in adopting reverse, the company will provide a path to do that, Hettinger said.
“If they want to make this a serious part of their business, they can go through an extensive training process,” he said. “We have people that they can train alongside to gain the experience and make sure that they’re holding their hands throughout the process. They can certainly refer it to one of the people that we already have certified as a reverse specialist, but then we’re also hiring reverse specialists that are just focusing on that area.”
A time of change
When asked if the recent industry consolidations and exits played a role in the company’s plans for reverse expansion, Hettinger said it had more to do with the changes across the broader mortgage industry.
“We’ve been planning this expansion well before that,” Hettinger said. “Again, we see the opportunity with HECM to expand and really provide a service to what I feel is an underserved section of the population. And again, […] as the number of Americans reaching retirement age continues to grow, I just feel the need for this product is going to continue to grow. And I want to make sure that we’re there to help fulfill that need.”
When asked what the industry should know about the company’s reverse expansion plans, Hettinger quoted Daniel Burnham, a Chicago-based architect who helped reinvigorate the city in the early 20th century.
“One of his famous lines was, ‘Make no little plans,’” Hettinger said. “And I feel that that’s something that Guaranteed Rate has always adhered to. Our goal is to make our company a top originator in the reverse space, and there’s really no other place I’d rather be working right now. I think it’s extremely exciting. […] We plan to bring our borrowers an unmatched level of service that [people tend to] think of as more a part of the traditional forward space.”