There are two dominanant reverse mortgage lenders in Puerto Rico, which currently control 62.3% of the retail marketplace according to data from Reverse Market Insight.
Those lenders—Moneyhouse and Senior Mortgage Bankers—may have a stronghold on the market, but it doesn’t mean there isn’t plenty of opportunity for others, says David Levis, CEO of Moneyhouse.
Besides those two, an additional 22 companies comprise the remainder of the production, which has been handled primarily by wholesalers Urban Financial Group and Sun West to date. Levis is confident that his new wholesale team can do better, and he is starting by targeting the banks.
“There are five or six FDIC-insured banks that we think can offer the product and because of our relationships, we can make it happen,” he says. “With our track record in Puerto Rico, all of the major lenders know and trust us.”
Those relationships are one important reason why others who have launched wholesale channels in Puerto Rico have struggled in the past to get the banks there involved, he says.
Banks such as Banco Popular, which has $29 billion in assets and is one of the biggest lenders in Puerto Rico, have largely shied away from offering the product, deciding to refer the business out to someone like Moneyhouse instead of launching their own initiative in house. “Those banks are the companies we will get involved,” Levis says.
Earlier this year, the company hired Sandy Tennekoon to launch its U.S. division and build out its wholesale business in Puerto Rico. Formerly with Urban Financial Group, she was instrumental in building Urban’s Puerto Rico business prior to joining Moneyhouse in May.
“The banks and brokers know and trust [Sandy]. She will do a fantastic job,” said Levis.
Moneyhouse also brought on Gloria Betancourt, a former Urban Financial wholesale account executive who was based in Puerto Rico to help expand its wholesale business. As part of the operation, Urban formed an alliance with Moneyhouse to purchase closed loans and remains the largest buyer in Puerto Rico according to Jean Noble, Director of Marketing for Urban.
Despite all the opportunity, Levis realizes there are some challenges when trying to grow the number of brokers and banks in Puerto Rico.
Last year, Puerto Rico passed a law that imposed a duty of good faith on reverse mortgage lenders, and also requires that lenders provide borrowers information about counseling including a list of three agencies that provide the service.
The bill came after legislators saw aggressive advertising in the marketplace, which has been stopped. “The law has helped to stop the aggressive advertising, the players that were doing it are no longer in the business.”
As a result of the media attention due to the law’s passage, the public perception of reverse mortgages was hurt despite only a few companies participating in the misleading advertising, even though the law does little to change how the program is offered says Levis.
“For the most part, the law copies many of the rules that we all already need to comply with as a result of HUD guidelines,” he says.