Multi-channel lenders have been warming to the reverse mortgage industry over the past year, seeing a potential opportunity to expand their presence in a space where they may not have staked as much of a claim. When you’re talking about major mortgage lenders, Irvine, Calif.-based loanDepot is certainly a player in the conversation.
To get a better idea of the company’s outlook on the reverse mortgage business and loanDepot’s ambitions for it, RMD recently sat down with Chief Marketing Officer Alec Hanson. The full conversation is available in the latest episode of The RMD Podcast, available now.
Serving the underserved
For loanDepot, an emerging priority across its business channels is adapting to serve traditionally underserved customers, Hanson explained.
“The reverse and the older adult community that would benefit from a product like this is 100% aligned to that kind of vision and ethos,” Hanson said. “We’re really doing our best start to get the word out and educate, and provide resources for people in that space because as you probably know, and the reverse community in mortgage definitely knows [that] it’s a very misunderstood product.”
The utility for a qualifying buyer is potentially high depending on the time in their life they could be seeking such a product out, which is why it’s important to keep education at the center of the company’s evolving reverse mortgage business activities.
“Finding those things, and finding the convergence of education and timing for people is really our priority to line that up,” Hanson explained.
Pandemic disruption
Additional interest in the reverse mortgage space is there, Hanson said, but it’s also tempered by the noise that exists in mortgage markets broadly at the moment.
“If you look at [the business environment] pre-COVID, our drive towards reverse has been on the same type of intensity as renovation lending,” Hanson said. “We’ve been the number one renovation lender now for about three or four years running, and that tenacity is something we’ve targeted at reverse as well.”
The pandemic upset the order of those ambitions, Hanson said.
“Enter COVID, where all of a sudden we just get awash with these waves of loans, like everybody did in our industry,” he said. “And all of a sudden, now we’re resource-constrained and we’re trying to figure out how to deal with the customer influx and serve the customers that are in our lap.”
This necessitated the company to prioritize certain products over others, which derailed certain initiatives including reverse, Hanson said.
“As we’ve normalized through this down cycle — and I’m not saying we’re through it, I’m just saying we’re just kind of settling back into a more normal reality — again, it’s like all cylinders firing towards the areas we want to be great in.”
The potential for reverse
When asked about the potential of the reverse mortgage product both at his company and across the industry, Hanson said that the evidence suggests its potential remains severely untapped.
“The reverse product, as it stands today, is an amazing tool in the hands of the right people,” he said. “So being very clear, it provides an unbelievable opportunity for families and individuals who are in certain places in their life, where this tool can come in and provide significant lift and quality of life improvement for those adults.”
The company maintains robust retail and call center organizations and, like the majority of the mortgage industry, both of those apparatuses are enduring losses in lending. For the right person who is in a certain stage of life and is in a position to benefit from unlocking home equity while wanting to remain in their home, someone calling in for such a solution can find one if they’re open to it,” Hanson said.
“[Maybe a customer who needs cash] can’t get it based on the credit profile they have,” he said. “But a reverse mortgage comes at solving those credit profiles from an entirely different direction. And so just from the sheer number of people who can’t get a traditional forward mortgage, we’re equipped to support people at scale, in getting their needs met, and [that] potentially [includes] a reverse mortgage.”
The right tool for the right job
For the right person, this is a product that could very well help to solve those kinds of issues when other, more traditional lending options are not available based on a person’s individual circumstances, Hanson explained.
“[Reverse mortgages] really fit into our whole [mission trying to] find solutions for customers across the spectrum,” he said. “We’ve recently rolled out our own HELOC product and our personal loans are back out. These are broad-spectrum tools to fit unique needs.”
Hanson’s perspective comes largely from his own experience as a loan originator, and the importance of a broad selection of tools available can be a big difference-maker for the originator aiming to find the right loan for a specific customer, he said.
“Today, you have people — especially as rates come down — who are going to be finally looking to move out of their house, because they’re not going to abandon their 3% rate,” he said. “But they might move later, and maybe looking at a reverse for purchase [could be] a good option. But you’ve got to have this toolkit of options that can really provide something.”
The company also sees the uniqueness of the reverse mortgage product as a differentiator in and of itself, since larger banking institutions have been out of the reverse mortgage business for the better part of 15 years.
“For us, it’s really about rounding out the offering, and serving those places that traditional banks are going to shy away from,” he said. “They’re not going to provide resources and that avenue, and [we’re] really able to support those people in those areas.”
