, and that number is growing every day as the Baby Boomers reach retirement age. Right now, the reverse industry is tapping just 2% of that market. But the reverse industry is set to expand, according to Kimberly Smith, senior vice president of wholesale lending for American Advisors Group.
“I think the reverse industry is heading for a growth period. I think the additional regulations that have been put on the product have made the product more mainstream, and I think that’s going to grow the industry,” Smith says. “I’m hopeful that the interest in the product from the consumer helps drive more mortgage brokers and bankers to offer the product.”
Last year, the FHA
added regulations to limit the amount of money reverse borrowers could draw out at closing, as well as placing other limits to make it easier for seniors to use reverse mortgages responsibly. Smith hopes the new regulations will ease originators’ concerns about offering the product.
“When you look at the industry as a whole, we’re tapping less than 2% of the potential clients. … So I really hope this improvement in the product helps swell that small percentage we currently have access to,” she said. “And the only way to do that is for more brokers and bankers to offer the product to their clients and market it to their clients.”
So how do originators get in on reverse? The first step, Smith said, is to make sure someone at your organization gains the necessary expertise.
“We’re dealing with a protected class. So don’t ever do anything you haven’t been through the training to do,” she said. “Reverse
is not complicated. You just have to take the time – and it’s minimal time – to learn the product before you offer it, so you accurately represent what’s available. The other thing I’ve found is that in the successful companies that offer this product, they have people who specialize in it, rather than just add it to everyone’s product offering. People tend to gravitate toward what they know, and if reverse isn’t given marketing attention and sales attention, it’s not going to grow within your company. So we’ve found specialization to be part of what is successful when you’re getting into this space.”
And the next step – just as it would be in traditional mortgage origination – is to find a lending partner who fits your needs.
“The key is to find a partner that makes sense for your organization. Different organizations have different needs,” Smith said. “Some organizations are really focused on training, some are really focused on marketing. The reverse mortgage
industry has a very finite group of lenders that offer those services. Obviously, I would recommend that they call AAG, because we have extensive training and marketing support. We give brokers access to as much or as little as they want in the process.”
There are 10 million homeowners out there who are eligible for