Over a career spanning 34 years in the forward mortgage business, and 25+ years in reverse, Lisa Moriello, CRMP, is enjoying the benefits of technology with one of the country’s largest lenders.
Moriello manages the Shelton, CT branch for loanDepot, a mortgage company headquartered in southern California, that has originated more than $165 billion in mortgages over the past decade and today ranks as the nation’s fifth largest retail mortgage originator and the second largest nonbank consumer lender. Currently, loanDepot is a third party originator of reverse mortgages.
At the helm of loanDepot is Chairman and CEO Anthony Hsieh, who played a critical role in developing LoansDirect.com, E*TRADE Mortgage and LendingTree, and has now built loanDepot into a next generation lending technology company.
With more than 2,000+ licensed loan officers and 150+ branches nationwide, loanDepot has ramped up its reverse mortgage business in 2020 and Moriello has been a key part of that effort.
Reverse Mortgage Magazine sat down with Moriello to talk about loanDepot’s passion for technology, where she sees room for improving technology in the reverse mortgage process and loanDepot’s efforts at expanding its reverse mortgage operations.
Reverse Mortgage Magazine: What distinguishes loanDepot from other large forward mortgage lenders that offer reverse mortgages?
Lisa Moriello: Our executive team. loanDepot’s leadership team has taken technology, sales expertise, and drive, and has wrapped us up to be one of the major forces in the mortgage business today. Reverse mortgages are going to get bigger and better for us, because we’re taking the time to do it right.
RM: Why should forward mortgage lenders embrace reverse mortgages as a viable product line?
LM: I’ve originated mortgages for almost 35 years and for much of that time I’ve been doing reverse mortgages alongside forward mortgages. If you don’t offer reverse mortgages as an option for your clients, then you’re doing them a disservice. I’ve always looked at my clients from what serves them best, either a traditional forward mortgage or a reverse.
RM: What attracted you to reverse mortgages in the first place?
LM: I was at my hairdresser. She just turned 62. She owned a major piece of commercial real estate and a salon. She had a financial planner. She set me in the chair and I almost lost part of my ear when I suddenly jerked my head after she said, ‘I want a reverse mortgage.’ I said, ‘You don’t need a reverse mortgage.’ The way the conversation went introduced me to the notion that a reverse mortgage is a tool that everyone should look at when they’re doing a retirement plan. She lived in a property that was free and clear. Long story short, we were able to set up the reverse mortgage, so that she could loan her business funds to pay off some expensive commercial debts. When these loans were being done in the 90’s they were used to help people stay in their homes. She introduced me to a whole new world. I’ve been working with financial planners ever since.
RM: Tell about me loanDepot’s technology. What makes it so special?
LM: We provide loans for our customers with reduced work on their part. The technology gives us access to information that we normally would have had to gather from a client in the form of paystubs and W-2 statements. Once I have someone’s credit report, I can verify their income a certain percentage of the time. I am also getting property inspection waivers. loanDepot’s technology provides a better borrower experience without giving up the relationship part of that experience. It allows me to spend less time on the paperwork and more time with my borrower.
RM: And you’re able to adapt this software so that your reverse mortgage clients benefit?
LM: At times, yes. loanDepot is currently a TPO (Broker) for our reverse mortgage business. We work hand in hand with the top investors in the industry to utilize our technology whenever we can. The reverse mortgage industry itself has not caught up to this technology. We collect information a certain way that HUD accepts on the forward side but not reverse. There are so many ways we can reduce the amount of work that reverse mortgage borrowers must do and give them a better experience. We push on that end. We provide information that gives our investors what they need to make a great decision. It’s about pushing technology-provided information to be acceptable. Some investors are better on that front than others. We have so many ways for borrowers to comfortably communicate with us, to send us information securely, and that alone has changed how business is done in the reverse mortgage industry.
RM: Compared to the forward mortgage world, the reverse mortgage industry has very few technology providers. Why is that and what can be done to attract more of them into reverse?
LM: It depends on the technology. The first thing that needs to happen is for HUD to say it’s okay. When that happens, technology providers will run to this industry. We need to get to the point where we can run automated underwriting on these loans, where HUD accepts property inspection waivers much like Fannie and Freddie do and digital verification of employment. It’s not just the technology, some of the underwriting itself needs to change. There are so many differences between what HUD allows on forward mortgages and what it allows on reverses. For example, on FHA forward mortgages, you can pay off debt to qualify. You can’t do that on reverse, which seems counterproductive since that’s what we’re trying to do is reduce our clients’ monthly outlay. That’s an underwriting issue, not a technology issue, but still worth noting.
RM: What kinds of technologies would you like to see adopted to help automate the reverse mortgage process?
LM: We need to be able to talk to borrowers with the technology they use. They need to be able to work on their iPads, or whatever technology they are comfortable with. We need to broaden our knowledge of what technologies seniors are using and gear that to what our industry needs to be doing. Then from the processing standpoint, we need automated underwriting. I should be able to run a loan through automated underwriting and know whether it passes financial assessment. There’s no such animal now, at least not for third-party originators. It’s more than just technology. We need to be able to have a better system for second appraisals than what is currently in place, and we need the changes to current guidelines to allow payoff of debt to qualify. If we want builders to use reverse mortgages, we also need to change the ruling that only allows an appraisal to be done when the property is as is.
RM: Is AU possible in a financial assessment world, or is there too much hands-on analysis that must go into each borrower’s financial history?
LM: It is possible. Automated underwriting goes through your information and generates a loan decision based on a variety of factors: credit scores, income and monthly debt payments. Financial assessment is about ratios and credit repayment. We have automated underwriting for VA loans, which works on residual income. Why wouldn’t we have automated underwriting then for reverse mortgages? We should also be able to automate the appraisal review process. Currently, an appraisal comes to us, we ship it to our investor, the investor sends it to HUD, and HUD runs it through collateral risk assessment. I can pretty much tell you what’s going to fail: properties in rural areas, properties in communities where nobody is selling and properties that are quite literally in the middle of nowhere. I’d like a technology that allows me to run the analysis, because HUD takes two to three days to respond. If I am in rural Tennessee, it’s going to take time to get a second appraisal. I’d rather skip that step. I look at the appraisal, I should be able to run it thru a system and find out if I need a second appraisal. Fannie and Freddie use a similar approach, but they rarely require second appraisals. Instead, they have a desk review. That would save our customers money and time and create a better experience. I know collateral risk assessment is new, but I feel if we don’t have these conversations then we’re never going to get anywhere.
RM: What about the proprietary market? Surely, those investors have the potential to be more flexible?
LM: Yes, proprietary investors are easier to work with. Proprietary reverse mortgages are heavily modeled after things that HUD requires on HECMs. There are only a few places where they are tweaked differently. The fact remains that HECM still accounts for the vast majority of reverse mortgages, so that’s why I’d like to see HUD allow for more innovation on the technology side.
RM: We’ve seen more and more forward mortgage companies expand into reverse. Tell us more about loanDepot’s plans?
LM: We had a lot of things that we needed to do first before we could put our focus on reverse. We started by launching a training program in September 2019 and now have 70 loan officers across the country who can write reverse mortgages. We are creating a separate processing team that will only process reverse mortgages. We are doing it the right way by making sure our loan officers are well-trained in the reverse product to better serve our customers. We need to make this product easier for consumers to understand. Though it’s getting better, advertising is still presented in such a way that confuses consumers. That’s where my loan officers come in. They are taught to teach the benefits and to correct general information they may have received from the media or a friend and make it more specific to them. That’s why we spend so much time on training, because it is relationship-based lending.