Last week, digital-based borrower conversion platform Mortgage Coach and reverse mortgage loan origination system (LOS) provider ReverseVision announced a partnership that will allow for more direct comparisons for borrowers between forward and reverse mortgage products. To get a better idea about what this new integration could mean for the proliferation of new reverse mortgage business, RMD sat down with Mortgage Coach President Joe Puthur.
Describing that the reverse mortgage product — particularly on the Home Equity Conversion Mortgage (HECM) side — has gone through a series of notable refinements in recent years, Puthur describes the general optimism with which Mortgage Coach views the reverse mortgage landscape on top of the favorable demographics in the industry’s corner.
The incorporation of mortgages generally and reverse mortgages specifically as part of a financial plan is also seen as a more important component in the equation, he says.
Mortgages — forward and reverse — as part of a financial plan
A portion of Mortgage Coach’s mission as a company is that mortgages, in general, are part of a person’s financial plan, Puthur tells RMD in an interview. A problem can arise when certain mortgage products and lending solutions are simply omitted from conversations with borrowers even if they might be a good fit for them, and reverse mortgages fall into this category, he says.
“When you really look at the broad spectrum of mortgage offerings that are available, only a small fraction are actually presented to the customers that would benefit from them most,” he says. “And when it comes to reverse, that product has had a very interesting story, and certainly has some brand issues with the market’s interpretation especially post-meltdown.”
This could be one of the reasons why reverse mortgages are generally underutilized, he says, even though such products are often beneficial for those they do actively serve. Making a forward/reverse comparison tool might be able to close the gap, and many of the company’s existing enterprise lending customers are already well-equipped to offer reverse mortgages, he says.
“Some of our largest customers are also the largest reverse lenders, folks like Finance of America have tremendous reverse business,” he explains. “And for years, they have provided the insight that there was an opportunity to help this segment of customers. We’ve always wanted to address it, but as equity has come to record levels and as the market prepares for a large influx of population that meets the criteria for a HECM loan, it’s never been more important or more pertinent to have these illustrations available. So, we just prioritized it.”
The combination of record levels of senior-held home equity and historic rises in home price appreciation (HPA) have helped to solidify the potential for reverse mortgages, and a side-by-side comparison tool could go a long way in showing a new segment of incoming qualified borrowers the options available to them beginning at age 55 for proprietary reverse mortgages, or 62 for the HECM, Puthur says.
“Never before has anyone been able to show a forward and reverse side-by-side, which is probably the largest challenge when you have a majority forward originator workforce that doesn’t have any capability of even introducing the reverse product,” he says. “Now, we’ve solved that. So, large lenders can have a bridge between the forward conversation and the reverse introduction with a total cost analysis.”
ReverseVision as a partner, expanding reverse mortgages
Of the 150 lenders that are currently served by Mortgage Coach, roughly 40 of them have the capability to offer reverse mortgages, Puthur said. That figure makes up a sizable chunk of existing clients, but there could also be use for the comparison tool by the other 110 companies, he says.
“Credit unions or other institutions that might not offer the loan themselves, but who may want to broker it out, this is the perfect segue for them to be able to talk to a credit union member and then introduce the reverse mortgage solution,” he says. “We are expecting that many of the lenders that have stayed away from reverse, or who had been tainted by whatever unfortunate branding issues there are with reverse, will revisit the financial benefit of the HECM loan through our illustrations.”
Seeking out ReverseVision as a partner was also a natural step to take considering that company’s existing prevalence within the reverse mortgage industry, and the number of adjacent companies it is already engaged with, he says.
“Through our partnership with ReverseVision, we’re going to track [the kinds of new business that is created],” he says. “So many of our existing customers decide to become ReverseVision customers and originate reverse mortgages themselves, or broker them out. But the way that we’re going to educate our existing customers is that all of our lenders will have the opportunity to see the comparison, and decide how they want to use it in their individual communication strategies.”
ReverseVision’s acquisition as a boon to the partnership
Another feather in the cap of ReverseVision in terms of this partnership is the LOS provider’s recent acquisition by Constellation Software. While there is still work to do to bring reverse mortgage awareness up to a higher level, the Constellation acquisition will give ReverseVision more tools to spread the word, Puthur says.
“When we’re when we’re thinking overall about the Constellation acquisition, that should give ReverseVision additional resources to grow and innovate their solution to further make it easier to use, to invest in UX and UI, I think it also is going to give them the opportunity to continue to innovate the forward and reverse conversation and the servicing conversation,” he says.
“Constellation has Mortgage Builder on the forward side, they have assets in servicing management solutions. So, when you think of how to make the HECM conversation holistic, and how to bring HECM loans to all points of the dialogue, it helps to have the support of an organization that’s touching the loan at every stage. Even the stages before the customer has been a HECM customer.”
Puthur also said that proprietary reverse mortgages are a key component of the equation in offering comparisons with forward mortgage products.