industry right now. We’re seeing a lot of other professionals being educated on reverses and realizing that reverses can be used as part of an overall financial strategy.” Building on its previous efforts, University Bank is developing a continuing education program for planners and real estate agents, Ziegler says. “We’re excited about that and, I think, with that comes more opportunity.” At FAR, meanwhile, attention is falling on forward brokers coming into the reverse market. The brokers see reverse loans as a way to offset the decline in forward loans and refinancing. New entrants often think that by adding reverse mortgages to their portfolio, they will be able to reach new customers, Scarpati says. But, he says, they are more likely to find business among previous customers who, for example, may have refinanced several times over the years. FAR is encouraging brokers to reach out. “I think they’re sitting on a gold mine, and they don’t even realize it,” he says. Talking About the Next Generation One intriguing feature of the market for proprietary reverse loans is that it includes members of Generation X, the relatively smaller cohort that follows the Baby Boomers. The Pew Research Center defines Gen X as those born between 1965 and 1980, meaning its oldest members are turning 59 this year. The cutoff for many proprietary reverse mortgages is 55. As Boomers entered the market, lenders often noted the generation’s greater comfort with debt and its willingness to embrace new technologies, opening new avenues for marketing and education. Younger retirees also are more interested in using home equity to support their retirement rather than saving it for their heirs. However, it is too early to say with any certainty how Gen X will approach reverse mortgages, executives say. “With reverse mortgages, no two loans, no two borrowers, are alike, and those in the reverse space understand that,” Ziegler says. “We come across some very unique circumstances.” Still, younger homeowners seem more comfortable with leveraging the equity in their homes to pay for what they need or want. “The younger generation is more familiar and more willing to treat that as an investment and get the cash that they need to thrive in retirement,” Scarpati says. Younger people also are seeing how their parents and grandparents benefit from reverse loans, says Norman. “Educating not only seniors but also the public on what a reverse mortgage is—versus what a reverse mortgage is not—has been something that we’ve been spending a lot of time on over the last few years,” he says. “And now we’re starting to see that light go on, that this is something everybody needs to be looking into when they start to plan their retirement.” Smoother Roads Ahead After a roller-coaster ride over the past two years, lenders are looking forward to a less volatile market, particularly where interest rates are concerned. When rates were rising, reverse borrowers often saw their potential proceeds shrink before their eyes, says Wilkinson. That often dissuaded them from closing on loans. “Lower rates and more stable rates, I think, are more conducive to the origination environment in general,” he says. Wilkinson doesn’t expect a quick rebound for reverse lending or a meaningful recovery in refinancing activity. However, he expects reverse mortgages will continue to appeal to borrowers as part of their retirement planning, particularly as the cost of living remains elevated. “More borrowers are considering reverse mortgages as a way to address that,” he says. And while the HECM limit jumped to nearly $1.15 million this year, some borrowers will need or want more. “There’s still plenty of a potential, addressable market for the proprietary products,” Wilkinson says. Joel Berg is a writer and editor based in York, PA. “There’s still plenty of a potential, addressable market for the proprietary products.” —Tim Wilkinson, senior vice president and head of capital markets at Longbridge Financial Proprietary Reverse Mortgages continued from page 19 20 REVERSE MORTGAGE / MARCH-APRIL 2024
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