industry has a very big client base to draw from. There are about 10 million qualified homeowners out there right now – and with the Baby Boomers hitting retirement age, that pool is just going to grow.
So why is the reverse industry’s market penetration still relatively low? One of the main reasons, says ReverseVision executive vice president Rob Katz, is simple lack of manpower.
“Let’s say that 10 million homeowners over the age of 62 have lots of equity in their homes. Last year there were 50,000 loans made,” Katz says. “So it’s something like 0.003% of the marketplace actually got a loan made last year. So when you’re talking about how big the industry is, I think there’s a tremendous amount of upside. I think what’s missing in the industry is more loan officers talking about the product.”
Jonathan Scarpati, vice president of Urban Financial of America’s wholesale lending division, agrees that the industry needs more originators.
“This is an educational sale. It’s really important to educate as many seniors as possible,” he says. “The problem is that there aren’t nearly as many boots on the ground as there should be. We need a lot more people to enter the space … because 97% (of customers) are happy with their reverse mortgages
. We just need to get the message out.”
“Something that I’ve heard frustrations about is that the sell cycle is a bit longer,” Katz says. “In the forward world, you’re dialing for dollars, and if someone’s not interested you hang up the phone and move on to the next person. In reverse, it’s a three- or four-month sell cycle. I think people getting into reverse need to understand that it’s going to take a little longer to build your pipeline. But once your pipeline’s built up, you can be cranking out three, four, five loans a month. It’ll just take three or four months to build that up. I’ve heard some forward guys get frustrated and give up after two months. You’ve got to work at it a bit longer than that, but once the pipeline’s full, it’s full.”
That longer sell cycle does have its advantages, Scarpati says. One of them is longer-lived leads.
“In the traditional mortgage market, I would say a lead is good for a week, maybe – maybe two,” he says. “In the reverse industry, I’ve heard of loans closing two or three years later. To be quite honest, that happens relatively often.”