Leading reverse mortgage industry lender American Advisors Group (AAG) has paused new loan submissions and suspended existing applications for its proprietary reverse mortgage offering, a correspondent partnership with Finance of America Reverse (FAR) to offer that lender’s “HomeSafe” private reverse mortgage product, according to partner communications reviewed by RMD.
When reached for comment, FAR emphasized that everything remains business as usual in regards to the ongoing availability of the HomeSafe product suite for other partners.
Pausing AAG’s proprietary offering
Similar to other disruptions observed in the proprietary reverse mortgage market in June and September, the reasoning given by AAG to its partners for the move is fueled by market volatility and what is described as “other macroeconomic factors.” The tumult has impacted both new loan submissions and existing loan applications. AAG described this as a move stemming from a need to “evaluate” the existing terms of the proprietary product.
While the AAG proprietary offering is suspended, the lender has encouraged its partners to discuss the availability of Home Equity Conversion Mortgage (HECM) loans as an alternative to private-label volatility, which remain available through AAG.
AAG had been offering HomeSafe on a correspondent basis under the brand name “AAG Advantage” through the company’s retail channel, and as “AAG HomeSafe” through its wholesale channel.
Lender responses
Later in the same day, FAR issued its own alert to partners assuring them that HomeSafe products are still available and that business related to the product suite is being conducted as normal, and that business is uninterrupted.
“This note is to make it clear to all partners that HomeSafe products are still being offered by FAR,” the alert said. “Please continue to send us your submissions and be assured that existing applications are proceeding as they normally would. FAR is here and ready to offer the highest level of service in the industry.”
The alert aimed to clarify that only those specific lenders who have suspended the offering are impacted by the move.
“As other lenders pause, evaluate, or otherwise offer feedback on the product, please know it is specific to their originations only and does not reflect the broad availability of HomeSafe,” the alert said.
RMD reached out for comment from AAG and FAR. An AAG spokesperson told RMD that no additional information would be released at this time.
“FAR’s HomeSafe products and our innovative retirement mortgage EquityAvail remain available to customers seeking to maximize their home equity so they can thrive long-term,” said Jonathan Scarpati, SVP of wholesale lending at FAR in a statement. “We encourage our partners to continue sending us applications with confidence.”
FAR also wants to assure partners that everything related to the creation of new HomeSafe business is active and online, Scarpati said.
“We also want our partners and customers to know unequivocally that it is business as usual for FAR and we remain committed to providing the highest quality customer service in the industry. It’s why we’ve been the top reverse wholesale lender for the last 12 years and counting,” Scarpati said.
The timing also coincides with recent changes taking place at FAR’s forward mortgage company Finance of America Mortgage (FAM). FAR reiterated that changes to that division are not impacting the reverse mortgage division.
Recent history
FAR and AAG first established their correspondent partnership in early 2018, allowing AAG to offer the products under its own branding while FAR simultaneously continued to offer HomeSafe directly through its channels. The move happened relatively early on in the timeline of the HomeSafe product, which has gone on to encompass a full product suite with various individualized attributes, such as a fixed- or adjustable-rate and a line of credit feature.
In an interview earlier this year, AAG President and COO Ed Robinson described the partnership between FAR and AAG as “strong,” but indicated that the lender was exploring ways to expand its leadership position in this area.
“[G]iven AAG’s general leadership position in the industry, we do believe there’s even more that can be done in the way of product development, marketing and positioning,” Robinson told RMD in January shortly after assuming his role. “So, we’re definitely looking at what AAG’s role is in regards to expanding that product development.”
Recent indications from reverse mortgage business leaders at industry events this year have been that interest in the proprietary product space from borrowers was growing as of this past summer, though the industry players which offer such products keep volume data very closely guarded.
“Our HomeSafe products represent a pretty significant amount of our overall volume,” said FAR VP of Field Retail and Director of Government Relations Scott Norman at a conference in May. “Certainly, with the rising rates, you’ve kind of gotten into some short-to-close scenarios that a lot of people may not have seen in many years on the HECM side. And so, I think some of the proprietary products can maybe fill that gap a little bit in some capacity.”
Editor’s note: This story has been updated with comment from Jonathan Scarpati of FAR and additional contextual information about the proprietary reverse mortgage market today.
