Reverse mortgage professionals often talk about a need to be dedicated to both the product and the demographic it’s designed to serve. Specialization, some argue, is a key differentiator for industry professionals that helps build trust with older Americans and blends with the more consultative nature of reverse business.
However, there is also a competing truth: the forward mortgage business — without any age-based restrictions and serving a wide variety of people in different stages of life — is far more prevalent in terms of business and visibility when compared to the reverse business.
This naturally leads companies to explore some kind of referral relationship with forward mortgage professionals, or in some cases to add reverse to the product offerings of primarily forward originators or brokers. Whether this is a good idea has been an ongoing debate within the reverse mortgage industry for years.
As the industry prepares to leave behind a challenging year, RMD sat down with different reverse mortgage professionals to gather perspectives on the viability of bringing more forward personnel into reverse, or maintaining a specialized separation.
The argument for forward integration
After acquiring American Advisors Group (AAG) early this year, Finance of America Reverse (FAR) became the undisputed reverse mortgage industry leader. The AAG brand now serves as the company’s direct-to-consumer division. FAR has an approach that welcomes forward integration for wholesale and retail with some caveats. This is according to Jonathan Scarpati, VP of wholesale at FAR.
“Our goal has always been to grow the overall market and educate more people about the benefits of home equity,” Scarpati told RMD. “Finance of America has been the long-time leader in wholesale because we work hard to connect with mortgage originators, make them familiar with our products, and explain what sets our offerings apart.”
He stressed the importance of not overlooking the specialization inherent in reverse mortgages.
“It’s also important to remember that reverse mortgages are a specialized type of financing that requires extensive knowledge and resources,” he said. “The processes and systems are different, so it’s not like a forward shop can immediately switch over and begin to sell reverse mortgages overnight.”
FAR actively assists forward mortgage partners who are looking to expand their offerings to include reverse mortgages, and can accommodate partners seeking either Home Equity Conversion Mortgage (HECM) products or its proprietary “HomeSafe” product suite, Scarpati said.
“We have already taken advantage of some opportunities in the forward mortgage market,” he said. “We absolutely see significant opportunities with other forward lenders in the future. A rising tide lifts all boats, and we are excited to welcome new players who will help grow the market and educate others about the industry.”
Making reverse ‘easy’
Top 10 lender and servicer Longbridge Financial is also a company seeking to bring more forward mortgage professionals into the fold and has a dedicated partner program designed to make the transition easier.
“Reverse Made Easy,” introduced in mid-2020, allows brokers who are interested in reverse business but have little to no familiarity with its processes to incorporate reverse operations. This has led to a split in the wholesale team, which has helped maintain both dedicated specialties and worked to broaden reverse accessibility.
“Our wholesale division for the last four years has been separated into two separate sales teams,” said Adrian Prieto, SVP of wholesale at Longbridge. “And it’s worked out really well. It’s provided us a lot of focus. There is a core team run by Bill Nolan, focused on the more established reverse mortgage lenders in the top 100 [Reverse Market Insight (RMI)] report. The RME team has its own set of account executives led by Bruce Ramirez, and they just focus on new-to-reverse, smaller reporting brokers.”
When asked where he stands in the ongoing debate between reverse specialty and broadening to include forward professionals, Prieto said that the reverse mortgage business should broaden access to it. The benefits are clear for those who have sought such partnerships out, he said.
“If you really want to be successful in reverse, leveraging your forward distribution network is really important,” he said. “And we’ve seen that success with [our partners like] CrossCountry, CMG and with loanDepot, as three examples that we’ve worked very closely with. We’re getting a lot of inquiries from forward shops looking to get into reverse.”
Challenges in bringing forward professionals into reverse
That does not mean the effort is without challenge, however, especially considering the more specialized nature of the reverse business, he said. Longbridge recommends that forward companies hire staff that can have reverse mortgage focus, but the companies are naturally far more interested in the forward market considering its ubiquity compared to reverse.
Sometimes, forward companies can also have unrealistic expectations for the development of reverse business, he explained.
“A lot of forward companies fall into a trap thinking, ‘Hey, we have a brand name, we’ve got great resources, so we could turn this on right away.’ But if they don’t see something happen in a few months, then they’ll flip the switch and then move on to something else. Those are probably the biggest challenges between the forward lender having the patience for reverse, and then finding the right people to help them build that business over time.”
Reverse specialty, leveraging forward skills
Harlan Accola now serves as the national reverse mortgage director for Movement Mortgage. He is currently working to establish a dedicated reverse division within a company widely recognized for its forward mortgage operations.
While Accola believes that forward mortgage professionals — from entry-level to executive leadership — should receive proper education about the potential benefits of reverse mortgages for clients while maintaining a referral path between them, he believes in the specialization approach.
“Recent industry ads went out stating ‘we will teach your forward people to be excellent reverse people,’ but that’s not efficient in today’s challenging reverse market,” Accola said. “We tried to do it at some previous places, but the thing that we know works is when a retirement mortgage professional — as we refer to them here — handles the loan details and the forward people kindle the relationships.”
Those forward professionals turn the client over to the dedicated reverse team to work directly with them and take the loan further with higher conversion rates, Accola said.
“Casey [Crawford, Movement CEO] and Mike Brennan, Movement president, have supported this initiative. That’s what Dan [Hultquist] and I and our entire reverse team believe, and we think this model will change the entire face of the program.”
