– Leveraging Reverse Mortgage Lending Can Boost the Bottom Line in a Down Market –
As lenders continue to weather the down market by maximizing every lending opportunity they can, those who are leveraging the potential of reverse mortgages are getting an edge over the competition. In Part 1 of this two-part blog series, we looked at the growth opportunities with home equity lending and how lenders can be aggressive – and efficient – in building their home equity business. In Part 2, we’ll consider reverse mortgages and how the game has changed to make it easier and more cost-effective for lenders to offer this product alongside their forward-mortgage products.
Reverse Mortgages Grow Up
It wasn’t that long ago that reverse mortgages were typically offered only by large lenders that could afford to set up a distinct business unit to handle them, or by smaller lenders that specialized in this type of equity-based loan product and could justify the investment required for technology, staffing, and marketing. In the early days, lenders were navigating the changing dynamics of a variety of issues affecting reverse originations, including compliance issues, reverse-specific LOS technology (or lack thereof), and training sales staff and loan originators on the specifics of reverse mortgages.
Fast forward to today, and many of these issues have been addressed, making it easier than ever for lenders to add reverse mortgages to their product suite.
Reverse Mortgages Make Sense Now and, in the Future
Industry experts are predicting that the popularity of reverse mortgages will only continue to grow due to several factors that, together, produce fertile ground for this type of lending:
- Millions of American homeowners are sitting on more than $18 trillion in tappable equity, a historic high for the industry. This means many homeowners who qualify for a reverse mortgage, including being 62 years old and having a low balance on their mortgage or owning their home outright, will have a sizeable equity nest egg to tap.
- As a whole, aging baby boomers haven’t saved enough for retirement. According to research from NerdWallet, the median retirement savings amount for people aged 55 to 64 is $134,000, and for people aged 65 to 74, it’s $164,000. That’s a far cry from what they’ll need to get by in retirement and, as a result, many will turn to the biggest investment they have: their home.
- According to U.S. Census data, by 2040, there will be more than 80 million Americans 65 or older, and since reverse mortgages are, by definition, designed to benefit retirees, this is a significant target audience.
- Thanks to years of education and marketing by larger lenders, more and more homeowners now understand how reverse mortgages work, including the risks and benefits, and are more willing to explore their reverse options.
Now that compliance and regulatory issues have been standardized across the industry, market potential for reverse mortgages is poised to grow, and consumers are less skeptical of a reverse mortgage, lenders need only to ensure they have the loan officers that can handle these loans efficiently and affordably.
The Zenly platform from Calyx lets you originate loans from anywhere on any device with a cloud-based, dynamic solution that saves money, time, and effort. The built-in point of sale allows you easily collect borrower information and streamline the closing process with eSign and easy document upload features. All this adds up to streamlined, efficient operations that will make home lending a breeze for both originators and borrowers.
Find out more about Zenly, the one-stop solution that lets you tap the reverse mortgage market here.
