While reverse mortgage professionals are optimistic that business will improve in the new year, everyone has to take a first step to get there. To that end, RMD reached out to reverse mortgage division leaders and loan officers to see what their number one priority will be in January.
Some said it’s important to emphasize to borrowers that both forward and reverse mortgage options are available to them. Others said it comes down to connecting with strong referral sources. Here are just some of the thoughts shared by industry professionals.
Forward and reverse options, hand-in-hand
Multi-channel lenders that operate in both the forward and reverse mortgage channels typically have larger, more well-developed traditional mortgage divisions. However, making clear to borrowers upfront that both traditional and reverse mortgage options — including both private-label and Home Equity Conversion Mortgage (HECM) products — are available to them will be key to capturing more borrowers who may be better served by reverse, according to Loren Riddick, national director of reverse mortgage lending at Thrive Mortgage in Alcoa, Tenn.
“[Our first 2023 priority] will be is what it has been: and that is that for every single mortgage practice under our umbrella, everybody needs to know that our mortgage practice is both forward and reverse,” he said. “It’s not just one-sided, eyes closed and fingers-in-ears forward only. Quite frankly, number one, that demand is diminished by probably 70-80%, while the reverse demand has gone up.”
Riddick describes his existing pipeline as being in a good place. The potential to bolster it further can come from informing any borrower over 62 about the reverse mortgage options available to them.
“The first thing that we’re doing is we’re scheduling as many webinars as we possibly can,” Riddick says. “We send invitations to clients and to referral partners, and we’re telling them there’s a reason why ‘Xerox’ means ‘copy.’ There’s a reason why ‘FedEx’ means ‘overnight.’ It’s simply because they were first. We want everybody to get out and give their referral partners the opportunity for their clients to hear the matter from them, for them.”
Prepare for a swing back
HighTechLending President Don Currie previously described how cyclical the reverse mortgage business is, and that it’s always best to prepare for the bad times during boom years. For 2023, the opposite notion is also true. That’s why the first priority of the new year is to prepare for a shift back, streamlining costs to be profitable at any production level.
“Get ready for when this market does surge back, because it will,” Currie said. “One of the issues that we had when we were at the peak of business was in human resources. We could not find individuals. And when you did, you had to pay them top dollar. Right now, what I’d like for us to be focused on is producing more units with the same number of people through technology efficiency.”
Currie credits the tenure of his company to its preparedness in pivoting to good and bad business cycles, he said.
“One thing about HighTechLending, and the reason we’ve survived since we opened in January of 2007 is we breathe with the industry,” he explained. “If the industry is expanding and things are going great, we expand and we and we ride that wave. When the industry contracts, we have a plan in place that contracts with it, and it keeps us breathing through these times. That’s really what I’m hoping for: that a lot of my peers out there continue to breathe, and that they take this opportunity to increase their efficiencies.”
Hit up reverse mortgage referral sources
Jim Cullen, reverse mortgage originator with University Bank in Green Bay, Wis., says that now is the time to go with what works. For him, that involves relying on the referral partnerships he has spent 18 years building up.
“Over that time, [I’ve partnered with] other financial institutions like banks and credit unions that don’t provide reverse mortgages,” he said. “Working with those folks, and hitting the financial planners up again, I do think there is a lot of opportunity out there for us just with the general climate and the way things are.”
The swing in the business observed during the pandemic suggests that Cullen is right, since general uncertainty about the economy led to more reverse mortgage business activity (though roughly half of that business consisted of HECM-to-HECM refinances). Still, home equity is a tool seniors can use since home values have remained largely resilient.
“I do think more people eventually, whether it’s sooner or later, will come to understand that home equity is a part of retirement and will want to utilize that,” he said. “So again, I’m just trying to get to those referral partners that [I have] established relationships with, reinforce those and at the same time, look for new sources of business.”