Why add reverse to your product mix?

by Ryan Smith15 Aug 2014
The reverse space is always looking to grow. But why should a traditional originator add reverse mortgages to a product mix that’s already doing just fine?

There are a lot of answers to that question, according to HighTechLending President Don Currie – number one being that it’s simply important to offer borrowers as many options as possible.

“I was a broker for 15 years and then on the banking side for the last 15 years, so about 30 years altogether,” Currie says. “And I think the philosophy has always been that when somebody sits down in front of you and there’s a loan in the industry to be offered to that person, you should be able to offer that loan. Right now, when it comes to seniors – particularly seniors that are living on Social Security or maybe a pension – they can’t qualify for the traditional loans, and really the reverse mortgage is the only option for them. As an originator, it’s really important that you’re able to place those seniors into the right loan for them. Back when there were stated-income loans, for instance, the industry really did a terrible disservice to senior by putting them into stated-income loans when they really should have been giving them reverse mortgages. If they can’t qualify for a traditional loan, they should be getting a reverse mortgage.”

Reverse mortgages are also less vulnerable to the vagaries of a volatile market, says Jonathan Scarpati, vice president of Urban Financial of America's wholesale division.

Reverse mortgages are a non-interest-rate-sensitive product. Whether rates are up or down, people are always looking for reverse mortgages," Scarpati says. "And it’s a lot less competitive that the forward industry. You’re probably competing with hundreds of companies versus thousands and thousands of companies that offer traditional mortgages. With the amount of seniors who are coming of age and the market that’s already of age, it’s a tremendous opportunity to grow your business and add an additional product. Not to mention that if you’re already spending money in the forward market and you’re generating leads, I guarantee you there’s a tremendous amount of opportunity in the people you’re already talking to.”

For Currie, one of the biggest benefits of having reverse mortgages in his product mix is the emotional payoff of helping seniors in need.
“I’m kind of a feel-good lender,” he says. “What I mean by that is that I really like it when we’re done with a transaction and everybody shakes each other’s hands. When it comes to reverse mortgages, it’s amazing the emotion that happens at the closing table. You’ll have seniors who are literally crying, saying that you’ve saved their life, you’ve changed their life – as opposed to on the forward side where they say, ‘Well, thank you for saving me $200 per month.’ This is really more of a life-changing, life-saving deal."



Is TILA-RESPA a good or bad thing long term?