The majority of reverse mortgage borrowers are served by the Home Equity Conversion Mortgage (HECM) product sponsored by the Federal Housing Administration (FHA), meaning they are at or over the age of 62.
And in most areas of financial services, companies are incorporating new technology into their spaces. While most customers are getting accustomed to it, it’s tricker in the reverse mortgage space. A borrower in their 80s today, for example, may not be as comfortable with managing their financial affairs online compared to a borrower in their 60s.
Still, the industry has to serve all of these customers, and finding that balance will be critical to the industry’s evolution, according to Tom Evans, EVP of marketing and technology in the reverse mortgage division at Fairway Independent Mortgage Corporation.
Finding the balance
Evans’ role at Fairway includes overseeing the incorporation of technology into the reverse mortgage division. While older borrowers may have different comfort levels with technology, Evans said what is easiest for the loan originator is often easiest for the customer.
“If someone does need a little more hand-holding, we still have customers who may not have an email address,” Evans said in a recent episode of The RMD Podcast. “And we have to honor that because we want to serve everybody, and we want to be as diverse as we possibly can be. There’s going to be various levels of education in our customer base, [which means] various levels of technology use.”
For some borrowers, conducting financial affairs online is a non-starter. For others, a borrower could see a reverse mortgage ad on their mobile device and be comfortable with uploading documents electronically, he said.
“They can’t do that today,” Evans said. “We need to empower them to do that if that’s what they want to do.”
According to Evans, it’s similar to how email use became more and more common from the late 1990s to the early 2000s.
“If that’s the case, you think about [how] those customers have had 23 years of experience on the internet,” Evans said. “So if someone just turned 62, they’ve spent most of their adult life using online resources, and they’re prepared to take the next steps to do it for every type of loan.”
Fear holds the industry back
When asked about what keeps reverse mortgage companies from creating more technological tools for borrowers and professionals, Evans said fear could be a driving factor.
“Honestly, I think we’re a little bit afraid,” he said. “I think that we’re afraid that if we raise the bar for the expectations of our originators and our customers, we’re going to lose both. I’ve had a bit of a renaissance on a lot of my thinking just in the last year or so. Because I’ve been in this industry for a long time, I’ve seen the evolutions and how slowly technology has progressed.”
That lack of speed, in addition to current market challenges, could be keeping the reverse mortgage industry on the sidelines with tech innovation, according to Evans.
“I think right now, we’re concerned,” he said. “Because volume is what it is right now, [we’re scared] that if we were to make a major technological shift and say to a borrower, ‘Hey, we really want you to go to this portal and upload your documents,’ that they might bail out because they’re already nervous.”
However, technology could help to alleviate those concerns, Evans said.
“I think the technology can actually help that because [it could help] you feel more stable, secure and in the know,” Evans said. “So, as you move through the process, technology can take all the mystery out. Right now, you’re basically mailing or faxing a gigantic portion of documentation with all of your personal information into it off to a company who is going to follow up with you to varying levels of success.”
Change is hard
Evans also noted that originators may also be less inclined to learn new ways of doing things.
“I also think, honestly, we have a challenge with a lot of our originators [who] don’t necessarily want to learn a new platform,” he said. “That’s not anything untoward about them, change is hard. Nobody really likes change. But if we’re really going to move this needle from 2% market penetration to something where we are a competitive offer against a forward mortgage, every time out of the gate, we have to get competitive when it comes to the way we offer the product.”
Senior customers come to reverse mortgage professionals because of the solution it offers them, Evans said.
“For years, we’ve been advertising to people that want the product, [explaining how] a reverse mortgage can do these 10 things for them. Every spokesperson we’ve had has gotten up on television and [described how they] can get ‘this’ with a reverse mortgage. So, we’re capturing that one narrow piece of the market that already wants a reverse mortgage.”
Moving beyond that scope is critical to expanding the business, Evans said.
“There are thousands or tens of thousands of people that want a purchase loan, or want a refi loan that don’t know anything about a reverse mortgage,” he said. “So, technology can help us flip the script to say, hey, here’s [a whole] menu of options.”
