Credit unions nationwide will now be able to refer their members to The Federal Savings Bank for their Home Equity Conversion Mortgage needs through a new partnership established this week. The bank is among the largest privately held federally chartered banks in the U.S. and has a defined focus on residential home lending, which led in part to this partnership to expand its reach for HECM loans.
“We think the market is wide open,” Mike Crossett, executive vice president, tells RMD. “If a credit union is not offering [HECMs] to their members and they have a population of people that have a need, those are opportunities for us to partner so they can serve those members.”
The partnership operates strictly on a referral basis, allowing the Federal Savings Bank to educate more prospective borrowers about the virtues of reverse mortgages, when they may not otherwise have ready access through their credit unions.
Further, the partnership allows those credit unions to direct members to the HECM as a financial tool without having to take on the responsibility associated with offering the loans directly, Crossett says.
“There are some [credit unions] that do offer reverse mortgages to their members, but they may be struggling with keeping up with the education and doing business in a sound and safe manner,” he says.
Credit unions across all states have access to the partnership, which has been in development since 2017. However, the timing of a concerted effort to launch now is tied to a new lending environment brought on by recent product changes implemented on October 2, 2017.
“The product has never been more safe and secure,” Crossett says. “I know a lot of [originators] in the industry are struggling because we have to have more conversations with more people who are going to qualify, but when you look at the macro [landscape] and how The Federal Savings Bank is set up, we are primarily focused on residential mortgage origination. The credit unions very much mirror our ethos. They want to serve.
Written by Elizabeth Ecker