As the markets for both products run into considerable headwinds, the strategy of forward lenders jumping into the reverse space has gained prominence — and one software provider is hoping to capitalize on the trend.
Baseline Reverse recently launched its position management software, a tool specifically designed to target forward lenders looking to enter the reverse world, which can often be confusing at first for newcomers.
“Reverse price discovery is pretty hard,” Baseline Reverse president and founder Dan Ribler told RMD. “There’s no place that I can go to to get a value of a loan. So we’ve changed that.”
The idea, according to Ribler, is to provide a web-based software platform for reverse mortgage players at all stages of the process, from originators to brokers to firms that deal in the secondary market.
“Really, the big opportunity in reverse is for more originators,” Ribler told RMD. “We’re rolling out this position management software that will cover 100% of the value chain.”
The program allows Home Equity Conversion Mortgage professionals to monitor information about every loan in their pipelines, including interest rates, net profits, and mortgage servicing rights valuations. In addition, Baseline will offer rate-sheet software that can compile the latest data for loan originators and brokers, Ribler said.
The system has already launched with a user base of issuers and other HECM players, Ribler said. Companies have the option of either licensing the software and taking it in-house, or using Baseline’s team to manage their reverse mortgage pipelines. To that end, the St. Johns, Fla.-based company recently hired Tanner Clements — a veteran of Liberty Home Equity Solutions, Ocwen, and SunTrust — to help manage software clients.
“[Clements] will play an integral part of our effort to grow the reverse space by making it easier for traditional forward mortgage lenders to add HECMs to their product menu,” Ribler told RMD.
The move comes at a time when HECM lenders and brokers are grappling with the effects of last year’s principal limit factor cuts, which have already led to a sharp downturn in originations; lenders are also seeing ramped-up competition on rate with the disappearance of the “rate floor.”
Meanwhile, on the forward side, lenders are facing down a future where increasing interest rates — after years of historic lows — look to erase the once-thriving refinancing business.
In the reverse space, the melding of forward and HECM has largely fallen under the banner of “generational lending,” the idea that one originator can provide a full spectrum of loans to serve customers at every step in their lives. The implication is that an older couple would go to their forward-mortgage broker in search of a reverse mortgage later in life — while also getting first-time homebuyer referrals from the children of their HECM customers.
Whether or not the concept has the potential to transform the industry remains unseen, but Mutual of Omaha Bank recently shook up the reverse mortgage industry by purchasing Synergy One Lending, marking a major expansion of a trusted brand into the marketplace.
“We think — we hope — our timing is really good on this tool,” Ribler said. “It’s a way to squeeze an extra 20, 25 basis points out of every loan.”
Written by Alex Spanko