This was a perspective shared by Mike Kent, the president of Liberty Reverse Mortgage during his keynote at RMD’s virtual event HEQ: The Future of Home Equity in Retirement. Following up on comments he made about the necessity for expanding reverse mortgage distribution, Kent detailed more about how current reverse mortgage industry players — from originators through brokers, executives and the trade association — can help to increase the size of the proverbial reverse mortgage “pie.”
The visibility of the trade association
In terms of a method that can be used to accomplish wider distribution of reverse mortgages and the concept of home equity release, Kent was quick to point out that the National Reverse Mortgage Lenders Association (NRMLA) has a lot of beneficial resources that can help in that ongoing mission.
“I’m on the board of directors of NRMLA, and I also sit on the executive committee,” Kent explains. “It’s a great organization that does a lot of really good work. They do a lot of work behind the scenes that people don’t always get to see, and probably, don’t fully appreciate.”
In addition to facilitating government relations at every level and working diligently on the industry’s interests, the association also reaches out to reverse mortgage-adjacent companies to try and bring them further into the fold of the industry and its auspices, Kent describes.
“One of those efforts is finding ways to reach out to other companies and other entities to be involved in our industry. We did it through an initiative to get the broker dealers engaged in our industry, those are the companies that handle all of our HECM loans. When we go to sell our HECM loans in the form of compound securities, it’s the broker dealers who act as the intermediary on those transactions, and we’ve successfully signed up some of those broker dealers.”
Another result of the work of the trade association has been in an observed rise in the number of more traditional mortgage lending companies that have come into the fold of the reverse mortgage industry, which is something that helps to bolster its influence among those who work in the much larger traditional mortgage space, he says.
“I’ve seen additional forward lending shops sign up to be part of NRMLA, and I think that’s an initiative that could be very beneficial for us to pursue,” Kent says. “It goes back to how we expand our reach through the trade association.”
Becoming brand and broader product ambassadors
Another path toward a wider distribution landscape for the reverse mortgage industry can apply to the people who currently work within it, Kent says. By aiming to be visible brand and product category ambassadors, the industry can help to determine the direction of the sentiment related to reverse mortgage products, Kent says.
“I think it’s in all of our best interest to be ambassadors for our product,” Kent explains. “It can be challenging, because we’re always very aware of competition. That’s because it is a fairly small market today, maybe it’ll peak at 50,000 units, but that’s still a pretty small market. We might be reluctant to bring additional players into the marketplace, but my opinion is that thinking needs to be reversed.”
By taking the approach of wanting to bring more people into the reverse mortgage industry, that will help to expand the understanding of the product category, which would conceivably help to expand its size, since that is an end goal that would be beneficial to everyone who operates within the industry.
“We [should] want to bring more players into the industry, because we want to [do more than] just find new ways to cut the slices of pie in different amounts for different players,” Kent says. “We want to find a way to make that pie significantly bigger. And if that pie is significantly bigger, then it benefits all of us. So, I think that each and every company, and each and every loan originator that’s in our industry today should be an ambassador for our industry, and probably more importantly, for this product.”
This is important because as additional methods are introduced that can allow seniors to tap their home’s equity, it’s possible that the reverse mortgage industry will have to make a case about why it can be the best method among a pool of other options, Kent explains.
“We’re going to learn through other products that can be offered that allow seniors to tap into that vast pool of [housing] wealth, [which is] over $7 trillion right now, and which can help them have better retirement outcomes,” Kent says. “We can’t be afraid of competition. Competition breeds innovation, and innovation breeds better, more efficient markets, and breeds bigger markets. We all have to be part of it. From our perspective, we’ve chosen the route we’re going to take. We’re going to keep pulling on that thread until we see even better results than we’ve seen so far.”