Reverse mortgage loan officers across the country are seeing a noticeable uptick in reverse mortgage business compared with levels observed in the summer of 2019, which many estimate to be related to a confluence of factors like the additional stress created by the COVID-19 coronavirus pandemic, along with a greater level of receptivity to the product category among other financial professionals. This is according to interviews with several loan originators from different parts of the United States conducted by RMD.
Almost universally, originators across the country related that their levels of business have risen notably in the midst of the pandemic with only one exception, as senior borrowers and their trusted advisors expand the scope of potential tools they may find useful in light of the situations wrought by the ongoing health crisis. However, at least one originator has not seen a notable rise in business during this time.
In the nation’s most active region for reverse mortgage business in Southern California, originator Tom O’Donoghue of broker Reverse Loans Now is on track to have a year of business unlike any he’s seen before.
“Business this year has been phenomenal,” O’Donoghue tells RMD in an interview. “I’m on track for my best year ever. I just hired my own processor, and so far she’s been a huge help. It’s crazy to the point where I need the help to follow up on leads, since my pipeline and the business is so big.”
The source of that business comes from a roughly 50% increase in the interest generated by financial planners and certified public accountants (CPAs), O’Donoghue says. After the stock market endured its first pandemic-induced difficulties in March, phone calls from those financial professionals started coming in far more consistently than they had before.
“My outreach was based on hitting up fee-based advisers,” O’Donoghue says. “They’re the ones that seem to be the most sensitive to the portfolios, since they get paid on how much of [a client’s] portfolio they manage. When a senior who has $50,000-$100,000 combined on the book of business has that money disappear by 20-30% in a single week, they don’t want to lose any more money.”
This leads that planner to naturally find another way forward, and has made them more receptive to seeking out the additional cash flow or line of credit that a reverse mortgage can provide, he says.
On the northern side of the state, Primary Residential Mortgage, Inc. (PRMI) branch manager Rich Pinnell is also observing a notable increase in the levels of business he is seeing, he says.
“[Business is] outstanding. From [a pure volume] standpoint, it’s fantastic. Double or triple normal volumes,” he says. “If I don’t do another loan this year, this will be my best year of the five years I’ve been doing reverse mortgages.”
For Pinnell, a renewed source of business has been from forward loan originators who refer reverse business to him, he explains. The forward side of the business is also seeing a spike in activity in the region, so the idea of taking on additional reverse business — particularly for a loan officer who doesn’t specialize in the intricacies of reverse — is a little too much at the moment. That’s where Pinnell steps in.
“So, that business has picked up because [those loan officers] are so busy, they don’t even want to try to do a reverse mortgage,” he says. “They immediately don’t even think about bringing in-house even though they all have reverse mortgage departments.”
While referring clients to someone outside their own organization doesn’t necessarily get them anything, Pinnell will refer the forward mortgages he can’t do back to the forward LOs who refer reverse business to him. The arrangement has been working very well, he says. On top of that, clients who previously decided not to move ahead with a reverse mortgage have been coming back to him.
“[Those people] have come back and contacted me and said, ‘you know, we’ve been thinking about this and we should probably move forward and get the line of credit set up now so we have it available to us,’” he describes.
From the vantage point of John Luddy, SVP of reverse lending at Norcom Mortgage in Avon, Ct., business has never been better. For his organization which is primarily a forward mortgage house, more and more of the loan officers at Norcom are starting to see the potential benefits of adding reverse mortgages to their repertoires, he says.
“Some recent hires have been very excited about doing reverse mortgages,” Luddy says. “After five years at Norcom, some of our forward people are deciding that maybe they ought to take a look at adding reverse mortgages to their portfolio of options for clients. That has helped [with business].”
In terms of client-specific instances of business, Luddy says he is hearing more about how the pandemic has upended the lives of seniors, which has spurred them to seek out tools which might be able to provide some additional financial stability.
“I had a conversation with a man from Connecticut that worked as an engineer to make the seats for airplanes, just the cushions,” Luddy says. “He got laid off. He’s in his 70s. He doesn’t think he’ll ever be called back, so he decided to do a reverse mortgage. This is a perfect example of how the pandemic is hurting the economy, on a global level.”
From a personal point of view, the variety of people seeking additional financial options out in the midst of this period of difficulty can come from anywhere, Luddy says. Although he has noticed that a majority of his loans in process are coming from trusted advisors working to keep their clients living in their own homes.
“I would say 80% of my pipeline, right now, is made up of fiduciaries, adult children, powers of attorney and conservators trying to keep someone out of a nursing home because of the fear of the pandemic,” he says.
In terms of call volume, Luddy says that his inbound inquiries are higher than they’ve been in some time. That doesn’t always translate into more closings, but more people are actively inquiring about reverse mortgages and are even progressing to the counseling stage. In terms of his raw closings, he has observed that they are absolutely higher than the amount seen one year ago, according to information he receives from his staff.
A universal rise in business is not completely indicative of the current reverse mortgage market, however. Business for Long Island originator Pat Whitlock has not seen a pronounced increase, and in fact appears to have slowed a bit due to the continued anxiety many New Yorkers seem to feel since they were hit so hard by the pandemic in its earliest months on American soil.
“Business for me is slow,” she says. “I hear of other originators around my area who tell me they’re blowing it out of the water, but I’m not finding that to be true [for me]. I think it’s because a lot of my referrals have come from family attorneys. A lot of people are still hesitant to go out, or even to work in their offices.”
One of the problems she is observing is that many of her clients seem technology-averse, which simply tends to prolong the process between an initial meeting and a loan closing, she says.
“As an example, I had a pretty straightforward loan which we started on back in January. We didn’t close until July, because the borrower herself was infected with COVID and spent 10 days in the hospital,” Whitlock says. “She has a smartphone, which is a good thing. She could photograph documents to send to me, but that’s the extent of technology that a lot of my borrowers have, if that.”
This borrower found herself exhausted for much of the time, which just prolonged the process of getting the loan closed, Whitlock says, and she’s seen similar slowdown with other clients.
Former staffers from HUD, FHA and the GSEs weigh in on how to press ahead in this volatile reverse mortgage climate.