The experience of the United Kingdom (U.K.) offers an example of what can happen when the financial planning community is on board. Because of the country’s regulatory structure, financial planners distribute the U.K.’s version of the reverse mortgage, known as an equity release product. It has between two and two-anda-half times the uptake of the U.S. reverse mortgage. Wider Distribution The reverse mortgage industry is relatively small in the U.S., according to Kent. That boutique quality of the field allows professionals to forge strong relationships. However, it limits the distribution network for what Kent calls “one of the best retirement products you can get a hold of.” Current market conditions, however, are creating an opportunity for expansion. With the forward business slumping, many originators are casting about for new products, Kent says. And many of them are looking at reverse mortgages. “The table has been set on the forward side, and I think you’re going to see a significant number of new entrants into the reverse space,” he says, citing his experience at a recent annual meeting of the Mortgage Bankers Association. At the meeting, about 50 forward lenders expressed interest in getting into the reverse business. But the lenders also expressed a need for education and assistance in certain areas, such as identifying potential borrowers. “That was their No. 1 requirement, their No. 1 need,” Kent says. Forward lenders may drive down profits in the reverse business by commoditizing products, he acknowledges. But that could be offset by greater volume and efficiency. In gauging the difference a broader distribution network might make, Kent estimates the reverse market dropped 30 percent to 50 percent following the departures of Bank of America and Wells Fargo during the past financial crisis. HECM originations peaked at nearly 115,000 loans in federal fiscal year 2009. Buoyed by refinancings, there were nearly 64,500 in the most recent fiscal year, which ended September 30. “It didn’t come back because we didn’t replace the distribution network,” Kent says. What’s Ahead continued from page 25 888.369.1573 | HTLWHOLESALE.COM HighTechLending, Inc. All Rights Reserved. NMLS #7147 (nmlsconsumeraccess.org). For more information on licensing please visit www.hightechlending.com/compliance-information 26 REVERSE MORTGAGE / JANUARY–FEBRUARY 2023
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