The reverse mortgage business – and the mortgage business in general – is not where people want it to be.
That was a recurring sentiment shared by a group of real estate professionals when asked to assess what they see as the industry’s biggest challenges of the year. As Home Equity Conversion Mortgage (HECM) volume declines annually, many industry participants have cited at least one key factor that could have caused the decline, but the perception has not been universal.
Prices, rates and estimates
Loan rates were the most cited challenge among the group of industry workers interviewed HousingWireReverse Mortgage Daily (RMD) about 2024 challenges.
Peter Sciandra, who serves as EVP of reverse lending secondary marketing at Fairway Independent Mortgage Corp. noted: “High inflation and high interest rates unfortunately kept many borrowers on the sidelines. As the year progressed, we heard a lot of talk from The Federal Reserve in terms of starting to look at rate cuts in the latter part of the year, that’s when we started to see some of those borrowers sitting on the fence start to come out of the woodwork.”
That led to an improvement in business during the third quarter, before the enthusiasm for potentially lower prices appeared to fade. Prices re-emerged as a challenge and continue to be so as the year draws to a close.
But despite the challenges posed by the standards, industry experts continue to find a way forward. In New American Funding (NAF), mortgage division leader Shannon Robinson spoke of the need to persist in a high-value area.
“Unfortunately, the same story continues when it comes to our industry facing these challenges,” said Robinson. “We’re seeing market volatility, and we’re not really seeing a lot of release in prices. But we continued to face those challenges. We’re going to have those loans coming in where we have to look at every opportunity we can get to save that deal and help that customer.”
The challenges of the mortgage rate also did not affect the industry according to Jim Cory, managing director of reverse mortgages at. Guild Mortgage.
“Many people are predicting that if prices do not go down, we will be in the middle of a very difficult year,” he said. “We may have had two dips in the rates, but they have come down admirably and it has not been as bad as everyone expected or predicted. I think that’s true from an industry perspective. We were strong, and even managed to grow in the Guild. “
Education and distribution
A long-term challenge for the reverse mortgage industry continues to be its marketing and messaging, especially in ways designed to overcome the barriers the business has faced for years.
For Cory, education is tied to the broader industry challenge of expanding product distribution, he said.
“Distribution is one of the things we are trying to solve at the Guild,” he said. “And I think companies like Guild are trying to solve it across the board. I just think that’s a really important point. As an industry, we need to really focus on increasing the distribution of who can set up a reverse mortgage. “
Robinson added that one of the ways NAF aims to address the messaging challenge is by spreading it across multiple platforms and categories, including retail lending and distribution across the sales divisions of his company. This also feeds into discussions with referral partners and the potential borrower’s older children, who are often the borrower’s most trusted advisors.
But growth can also bring a series of challenges. In loanDepotThe company has worked to increase its reputation more broadly, which has had an impact on the reverse mortgage segment, according to Lisa Moriello, its national reverse mortgage sales manager.
“We are expanding our reach, becoming the main agent in many states,” Moriello said. “And we do that like we do everything else: very carefully. So for us, that has been both joy and pain. We are very happy to be able to be the main agent nationally, but it has been a long road for us to get there, because we are very careful in the way we do things.”
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