At FAR, traditionally a wholesale lender, the addition of AAG’s direct-to-consumer model is expected to strengthen its business. “To be able to bring those two models together gives us what we think is a very unique perspective and opportunity,” Norman says. In 2024, the company plans to focus on education and awareness as tools to grow the reverse market. “We have a responsibility as the industry leader to help Americans who want to age in place and navigate their retirement to explain the options available through home equity extraction and the value that that type of product can have on their overall retirement plan,” Norman says. And FAR, which has launched numerous private-sector reverse products, plans to continue innovating. New products unveiled this year include HomeSafe Second, a second-lien reverse mortgage product that offers a payment-free alternative to a traditional home equity loan. “That’s been a great product,” Norman says, noting that it represented a response to rising interest rates. “Finance of America has had a very nice track record of being innovative regardless of what the economic situation is and where interest rates are.” New Players Take the Field High interest rates may have dimmed the appeal of reverse mortgages by reducing the cash available to borrowers. But they have not tarnished the appeal of the market and its potential. Several new companies entered the reverse mortgage space. One is The Federal Savings Bank, a Chicago-based lender that affiliated with Harbor Mortgage Solutions in June. The Braintree, MA-based firm specializes in reverse lending. “They are recognizing that this is an area that offers significant growth potential, and that observation, I think, is spot on,” says George Downey, CRMP, Harbor’s former founder and CEO. He is now a reverse mortgage lender and regional senior vice president for The Federal Savings Bank. The bank has been helping Downey’s team with marketing and back-office services, allowing reverse lenders to focus on sales. It also opens a national market. “It’s turning out to be a great relationship,” Downey says. Another new entrant is San Diego-based Guild Mortgage, which bought Colorado-based Cherry Creek Mortgage in March. A news release at the time described Cherry Creek’s reverse business as “providing an opportunity to expand Guild’s range of services with new expertise for this important group of customers.” “This is a very strategic offensive move for us,” Jeff May, Cherry Creek co-founder, said in a statement at the time. Additional newcomers include forward lenders Movement Mortgage, loanDepot, Cardinal Financial, Watermark, New American Funding and CMG Financial, Mayer says. He also notes that the Mortgage Bankers Association has created a new working group for reverse mortgage lenders. “These are all positive signs in terms of the broader acceptance of our product,” Mayer says. However, success will hinge, in part, on the approach taken by newcomers to the reverse market, Downey says. “There is a big difference between forward and reverse. In my opinion, the reverse mortgage is not just another mortgage product. It is a different business, period.” The senior clientele, for example, is a protected class, requiring responsible and ethical marketing, he says. “It is a consultative relationship and a consultative responsibility.” Secondary Effects The ups and downs of the reverse mortgage market have been playing out in the market for bonds backed by the product. The refinancing boom in particular fed into declining values for the bonds, as loans were paid off Adapting: Part 1 continued from page 21 George Downey 22 REVERSE MORTGAGE / NOVEMBER–DECEMBER 2023
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