Reverse Market Insight (RMI) last week announced the availability of a new pricing platform designed to simplify the organization of multiple lenders’ rate sheets for brokers, allowing lenders to more easily price their loans in relation to their competition, and offering Home Equity Conversion Mortgage (HECM)-backed Securities (HMBS) issuers to see loans already in the market to distribute rate sheets for wholesale and retail channels.
This was developed based on conversations and industry feedback that RMI had with people from across the reverse mortgage industry, but there’s also another goal at work: lowering the barrier to entry for new professionals who may be looking for an easier opportunity to jump into the reverse mortgage business.
To discuss the new pricing platform and how RMI hopes it could help spur the entrance of new reverse mortgage industry players, RMD sat down with RM President John Lunde.
RMD: What issues did you see that led to the creation of the new pricing engine?
John Lunde: We’ve talked to clients for probably a couple of years now about the challenges and the inefficiencies they have in trying to compare rate sheets. Things like trying to understand what the best loan is for [their] borrower, but also doing that in the context of [how they will] actually get paid on this loan. So, there’s a balancing act, and the level of the manual work to do that really [reinforced] a lot of friction in the process. So for us, when we see a lot of friction in a key business process, that’s a pretty clear signal that maybe we should explore a little further.
So we talked to a whole bunch of different [existing and] potential clients as well as other folks throughout the industry about the challenges they were seeing in how they did this. Everybody follows a similar process. Most people are looking at the rate sheet and trying to figure out where their product is. Between the rate, margin, utilization and [other factors], they can figure out what to expect on the price. And then, the second you add a potential additional lender investor to that equation, everything gets much more complicated.
Every time you’re thinking about and looking at what the product scenario is looking like, it was creating a lot of friction. And so then, as people were creating their own rate sheets, it was also creating more friction on top of that. How they distributed those and managed who was on what pricing level or which rate sheet goes to which person, all of that kind of noise. So for us, we saw that there are some things that we can do here to just make this process easier, and just make it a better process: quicker, faster, simpler, and [resulting in] less brain damage overall.
RMD: In terms of how those frictions impacted the potential entrance of new players into the business, were you talking to forward mortgage professionals specifically, or reverse practitioners who are trying to appeal to more forward people?
JL: It’s both. Our clients have always been reverse mortgage-focused entities, whether that’s companies, loan officers, or whomever. And so just by nature of that, it’s always going to be more weighted in that direction. That’s who we’re looking to serve fundamentally. But, a lot of times — especially nowadays — more and more of our clients are doing both.
And then also, more of our clients, even if they personally don’t do both reverse and forward, are talking to forward loan officers as part of growing their personal reverse business. There were a lot of different versions of that conversation. But we were getting feedback from both sides, and trying to make sure that we were doing something that made sense all the way around.
RMD: How do you see this potentially working into the operations of lenders and brokers who are actively trying to appeal to more new people?
JL: I think there are probably people in the past that have been [turned off by the idea of] dealing with this level of friction. If you’re asking me to learn a new product, and at the same time you’re asking me to do all of these things that seem very inefficient and frankly time-consuming, it’s just another hurdle for somebody to get over as they try to enter into the space.
We’re actively trying to make it easier to bring new originators into the space. Whether that’s partnering with reverse wholesalers and existing clients there, or reverse originators that are looking to partner with forward originators to build some relationship there, we’re proactively trying to make it easier for everybody involved.
RMD: How is the response so far?
JL: We’ve had a really good response. I think a lot of people see the opportunity. And really, there’s an interesting moment right now where forward mortgage loan officers [are taking a closer look]. We’ve been in this place before where the refi, boom on the forward side ends, and they’re looking around for new opportunities. I think this is just a small piece of why reverse is a considerably more attractive opportunity for them this time around compared to the end of the last forward refi boom.
So I hope we see a much better uptake on the forward side, in terms of really making reverse a big part of their business. Because, again, I think that’s the way that we really grow as a whole industry. […] Ultimately, this is the first step down this path for us. We see this evolving as we go, but we always just keep that perspective of trying to help grow the industry and help our clients grow. That’s really where our hearts are and where we want to continue to support them.
