Nov/Dec 2021 RMM

Board Room Some Ideas to ‘Grow the Pie’ By Mike Kent, Co-Chair, NRMLA Board of Directors, and President, Liberty Reverse Mortgage NO DOUBT it has been a strong year for our industry. If we maintain our current pace, we will finish the year with about 51,000 Home Equity Conversion Mortgage (HECM) endorsements, approximately a 14 percent increase over 2020. We are also on pace for record Ginnie Mae HECM Mortgage-Backed Securities issuance levels. However, even with this strong level of activity, industry endorsements are still less than half of what they were at the program’s peak in 2009. What has contributed to this downward trend? And how can we grow the pie to help more seniors realize better retirement outcomes and help our NRMLA members enjoy a greater level of success? Changes to the HECM program over the last several years that have improved its health certainly may have accounted for a down draft in industry activity. However, in looking at industry data, these changes do not seem to account for most of the slide in HECM activity as it occurred prior to these program changes. What does appear to be the leading cause is a shrinking of distribution outlets led by the exit of the three largest lenders in the space followed by the exit of approximately one-third of companies originating reverse mortgages. These exits appear to be aligned with a more than 50 percent loss in HECM endorsements from 2009 through 2012. The majority of the volume loss has not been recovered by the remaining companies in the industry. There are approximately 570,000 licensed and regis- tered mortgage loan officers in the lending industry. They currently originate conventional loans, agency loans, gov- ernment-backed loans, non-QM loans, jumbo loans, land loans, ranch loans, home equity loans and the list goes on. Unfortunately, very few of these originators originated reverse loans. So how do we get significantly more of these originators originating reverse mortgage loans so we can grow distribution and thereby grow the pie? NRMLA has begun taking steps by establishing a Membership Committee whose mission is, in part, to develop ways to expand the association’s membership. Also working with the Education Committee, the new commit- tee will examine opportunities to help ensure new mem- bers fully understand the reverse program and some of the unique needs and challenges of the reverse mortgage orig- ination process. In addition to the steps being taken by NRMLA, several of the largest reverse mortgage origination com- panies are partnering with the forward origination indus- try to add reverse mortgages to their existing product menus. Getting better adoption of reverse mortgages by the forward lending industry could be a game changer for our industry. Improved technology will also be crit- ical to fueling the expansion of reverse mortgage distri- bution outlets. We will need to develop software that allows for the comparison of multiple types of loan options for borrow- ers and loan origination systems capable of originating, processing, underwriting and closing reverse loans. In addition, we will also need a standardized file format that will allow loans to be easily and seamlessly ported from lender to lender. Until integrated technology solutions are available, many reverse mortgage companies, including Liberty, offer turnkey processing platforms that make it easy for forward lenders to enter the reverse space quickly and easily without investing significant resources. We can also do more to raise awareness and engagement by forward originators through increased participation in forward mortgage industry associations, events and advertising. As I stated at the beginning of this piece, 2021 has been a good year for our industry. Through the dedication and tireless efforts of the NRMLA members, tens of thousands of seniors will enjoy a more comfortable and secure retirement. Let’s all commit to making these outcomes available to thousands of more seniors. Let’s support and do all we can to grow the pie. 6 REVERSE MORTGAGE / NOVEMBER-DECEMBER 2021