California-based reverse mortgage lender Ennkar has entered the wholesale reverse mortgage channel as of the end of last week, and RMD discussed the move with co-founder and branch manager Omar Ennabe, as well as the company’s new wholesale leader Josh Moran. The pair spoke about how they hope to make their wholesale offering different, but they also alluded to broader goals for the industry.
Now, RMD returns to the pair to talk about their broader goals for the wider reverse mortgage industry. While acknowledging that the presence of a new wholesale player may not be exactly what the reverse mortgage business is most excited to hear, Moran and Ennabe discuss how there may be a chance to grow the industry even in spite of current challenges.
The need to ‘grow the pie’
Ennabe and Moran previously discussed some of the ways the industry might be able to improve through the entry of more forward mortgage professionals into the reverse space, and one of the ways they seek to do that is by making the barrier to entry in the industry as low as the company can.
“That’s the motto or slogan that we’re going with: ‘let us be your expert,’” Ennabe says. “Let us be your counsel, advisor and your guidance in helping your clients. We will help these people learn how reverse mortgages work, and I think that that will lead to much higher market penetration.”
The hope is that such an approach can also lead to the entrance of more accomplished brokers into the reverse mortgage space when they realize they can focus primarily on origination.
“[They] can focus just an originating, [and we] will do the entire back end,” he says. “That’s what we want.”
For Moran, the need to grow the proverbial “pie” of the industry is a critical factor to the proliferation of the reverse mortgage product category, since many existing wholesale players might be disinclined to view a new wholesale entrant favorably, he says.
“There’s always a little bit of ‘hemming and hawing’ when a new closed-loan seller enters the space,” he says. “And then when they open up into wholesale, it definitely raises eyebrows amongst the established reverse wholesale lenders, and honestly, the Ginnie Mae issuers. There’s always a little bit of backing off, because [they might say] ‘these guys are now competitors and no longer just our clients.’ But on the other hand, if you look at the bigger picture, the more lenders that we actually have in this space, then the more penetration we get into the mortgage broker market, which leads to more penetration into the senior community market.”
The proverbial language of “the pie” — meaning the overall size of the reverse mortgage industry — has been discussed a lot by industry professionals, and Moran sees that anxiety coming from the perception that the size of the “pie” is a fixed quantity.
“I hear so many people say, ‘well, the pie is only so big, we’re just making all the pieces smaller,’” he says. “And I heard that when I started up the wholesale division at one of my former companies. I heard that when I took a previous company from 20 to 30 loans a month up to 150 to 200 loans a month in two years. People were griping a little bit that the pieces of the pie are just getting smaller, but that’s on us as an industry. We need to make a bigger pie.”
Reverse mortgage interest at NAMB
At a recent national conference hosted by the National Association of Mortgage Bankers (NAMB) in Las Vegas, Ennkar was set up with a booth taking inquiries from the assembled mortgage professionals and brokers trying to accomplish exactly that. Other reverse mortgage lenders — including several top 10 lenders — were also in attendance at that event, and if their experience was anything like what Moran describes then there could be an opportunity to shoot for a bigger pie, he explained.
“The booth was packed pretty much the whole time,” he said. “The conference hall was definitely filled, and I think the booths that were getting the most interest were a lot of the non-QM people, even though a lot of the products on the non-QM side are all very similar. The HECM loan is kind of the ultimate non-QM in that you’ve got it FHA-insured product.”
The raft of difficulties being faced on the forward side of the business may have contributed to a heightened interest in reverse as noted by people manning Ennkar’s booth, he says.
“There were quite a few brokers who were there who had some familiarity with the product, and had done a HECM or two in the past,” he says. “And now obviously, with the rates where they are on the forward side, they’re really trying to find whatever product they can to put in whatever new arrow they can to put in their quiver.”
Still, there were a lot of people who had never before touched or considered a reverse mortgage before, and that’s where a lot of opportunity presented itself for any reverse mortgage company in attendance, Moran said.
“If you go to a conference, and there’s one booth tucked in the back trying to promote a product, it’s not going to have as much impact as you can have when you walk in the front,” he says. “One of the major lenders on the forward side who also offers the reverse product is advertising it front-and-center. When you see several other major companies out there all selling the same thing, it really does change the mindset of the brokers [who can now see reverse] as a viable product, and no longer something that they really have no idea about.”
Attending conferences like NAMB or other forward mortgage-facing events could make a difference in potentially opening up more reverse companies to new client databases, which can serve the broader goal of growing that proverbial pie, he says.
“The databases that the forward side has with regards to clients and their relationships are things that all of us in the reverse space need to tap into and invite them in,” he says. “Because they’ll bring more clients. And the more clients they bring in, the more their friends and family members and whoever else starts learning about the product, and the more interest we can get.”