customers. It recently lowered the age limit on its Home Safe product to 55. Future innovations could include reverse products designed for second homes, says Mike Kent, president of Liberty Reverse Mortgage, a division of PHH Mortgage, which is a subsidiary of Ocwen Financial Corp. Another possibility is a reverse product that lets borrowers draw a lump sum at a fixed rate up front and then make subsequent draws at variable rates, Kent says. “It would give borrowers more control over how they plan and execute on their retirement.” Kent also would like to see a narrower gap between the interest rates on HECMs and private-label products. Rates are typically lower on HECMs, since the program’s government guarantee virtually eliminates risk for investors. Closing the gap hinges, in part, on increasing volume for private-label products, he says. That would bring in more investors, which would add fuel to the fire of innovation. Still, private-label products have come a long way since they re-emerged over the last seven years, he says. “The market certainly is opening up pretty quickly.” Private-Label Products continued from page 21 Teaching Loan Originators How Reverse Mortgages Work THE REFINANCE BOOM has given forward mortgage originators plenty of work over the past year. But with interest rates expected to rise, savvy originators are preparing for future sources of growth in lending. Among them is the market for reverse mortgages. They are learning the virtues of products that are a way for older Americans to stretch their retirement savings and stay in their homes—or purchase new ones without having to worry about mortgage payments. “When you go on enough roller coaster rides in the forward space, you begin to realize that the reverse mortgage is a good hedge because it is less rate-sensitive,” says Kimberly Smith, senior vice president of wholesale lending for American Advisors Group (AAG). “When originators can see that big picture, that’s when we can get them to sit down and listen.” Still, for an originator used to forward loans, the shift to reverse mortgages requires some level of adaptation, according to Mark O’Neil, national sales leader for wholesale and correspondent lending for Reverse Mortgage Funding (RMF). The language and the math are different, he says. The timing also is not the same. While a forward borrower driven by rates may seek to close in 30 days, a reverse loan typically takes longer. “This is a consultative process,” O’Neil says. “Borrowers may take a year or more to decide.” To help brokers adjust, RMF, AAG and other wholesale reverse lenders offer training and clearly defined channels for entering the business. “They don’t have to come in as an expert,” says Smith. “We’re just looking for commitment to learning the product.” Originators could function as brokers, working directly with borrowers and letting wholesale lenders take care of operations behind the scenes. They could function as principal or authorized agents, where they would take on more of the risk of lending. Or they could take on all the risk of lending as closed-loan sellers or correspondent lenders. For total newcomers, AAG offers what it calls the AAG Concierge Experience, or ACE, Smith adds. AAG works closely with brokers in that channel to get them up and lending without the need for as much internal staff of their own. The program was launched three years ago. “We want to make it as easy as possible for the 20,000-plus mortgage brokers that don’t currently offer reverse mortgages,” she says. Education of brokers also is a priority for Mutual of Omaha Reverse Mortgage. “We are continuously Kimberly Smith 22 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022
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