Application programming interfaces (APIs) will have a role to play, too. They allow different systems to exchange information. APIs, for example, may speed up the exchange of banking information for borrowers, which could lead to faster draws from reverse mortgage lines of credit. Draws used to take five days, now they take three, Dyakin says. “You can envision these taking hours, or even less, as we ... develop system integrations.” Other areas for improvement include integrating appraisals into reverse mortgage systems, Martignoni says. “That will come.” Technology will enhance compliance once systems overcome the complexity of the reverse mortgage, says Martignoni. His company has four in-house attorneys on its development team, as well as outside counsel. Blockchain technology, which creates a secure chain of custody for financial transactions, could have a role to play in helping to move loans between originators and servicers, Dyakin says. It is already starting to happen on the forward side “The sky’s the limit, to some degree, as to what can be done,” he says. New Frontiers Some of the most ambitious plans entail finding ways to integrate reverse and forward mortgages on the same loan origination system (LOS). A combined LOS would make it easier for lenders to offer both mortgages side by side. “That today could really be the opportunity that expands the market,” Ryczek says. “That could be the game changer.” A combined system, for example, could help tens of thousands of people over 62 who can’t qualify for forward mortgage loans or home equity lines of credit. In 2018, nearly one-quarter of the 2.5 million people over 62 who applied for home equity and other mortgage-related loans were denied, according to research by Stephanie Moulton of Ohio State University and Christopher Mayer, CEO of Longbridge Financial, a reverse mortgage lender. (Mayer previously served as senior vice dean and director of the Milstein Center for Real Estate at Columbia Business School, where he continues to teach today.) Most of those turned away were not offered another option, such as a reverse mortgage, Ryczek says. “For me, that was a huge lost opportunity for growing the industry.” In addition to spurring loans, a combined system would give reverse lenders access to innovative technologies in use on the forward side, Ryczek says. APIs can form a bridge between reverse and forward systems, he acknowledges. “But at the end of the day, it goes back to, ‘Why not combine so you don’t have two systems and the hassles of moving data between them?’” The end of the refinance boom likely will prompt forward lenders to explore the reverse market—and thus spark interest in integrating forward and reverse systems, says Martignoni. “Forward lenders are often surprised that their LOS doesn’t cover reverse mortgages,” he says. “Once realizing this, they want the reverse LOS to easily plug into their existing infrastructure via API.” In whatever direction the technology advances, lenders and servicers should be sure not to leave any borrowers on the wrong side of a digital divide—not that regulators would allow it. “Many people who need a reverse mortgage are not those who have the latest technology or who are very tech savvy,” Martignoni says. “We need to have both.” REVERSE MORTGAGE / JANUARY–FEBRUARY 2023 31
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