While the last few years have been tough on the reverse mortgage industry, I’m starting to feel like the tide is changing—and it has nothing to do with our new president.
With RMD turning 10 years old, I’ve been to a lot of reverse mortgage trade shows over the years. After being on the circuit for so long, you get to a point where you seem to know everyone at each event.
Rather than going to trade shows to meet new customers and develop new relationships, the trade shows have been more about seeing old friends and wholesale account executives trying to steal business from each other by offering better pricing and fancier steak dinners.
However, after my experience a couple weeks ago at the ReverseVision UserCon event in San Diego, I think that might be changing.
New Faces in the Industry: The Missing Link?
As I was walking to the opening reception, I expected to see all the usual people who travel the reverse mortgage circuit. But as I stepped into the room and looked around — I barely knew anyone.
I soon found a small group of people I’ve known for a decade, but as I looked around more closely, I realized there were a lot of new companies at the event. About an hour earlier, RMD editor Liz Ecker had been in a session designed for lenders new to the industry and it was packed — standing room only.
According to ReverseVision, there were more than 90 people signed up for the session designed for those new to the business, and the number of ReverseVision platform users has been increasing steadily over the last few years.
At most reverse mortgage events in the past, you might see a few new faces, but they were always the minority and rarely would you ever see them again. Most came into the space with dreams of “changing the game.” They would look at the current players and think they could build a better business based on all their success in the forward market.
Every company I’ve seen come into the space with any sort of “game changing ideas” has been out of business within a couple years. All of them.
What outsiders don’t understand is that the reverse mortgage business is hard. It takes a long time to close your first loan and success doesn’t come overnight.
Look at American Advisors Group, the largest reverse mortgage lender in the country. While it’s a well oiled machine now, it couldn’t have been further from that at the beginning — talk to founder Reza Jahangiri about how the company almost didn’t make it before seeing any results.
After talking to a few companies coming into the space at the event, it was clear they were attending to educate themselves on reverse mortgages as a new line of business that was going to supplement their forward volume. Rather than the game changing attitude, they were realistic and excited about the opportunity the product offers their business.
Education — We all Must Put in the Work
Part of the problem is that educating lenders about the industry is hard work. We’ve known this for years. Wholesale lenders have to put in tons of work to bring on new clients, and if they only do a few loans a year, is it really worth it?
Most AEs would rather spend the time going after someone else’s client and getting a piece of their production because that requires less work than training someone new to the industry.
As a result, vendors like ReverseVision are being forced to educate people on our industry through crazy efforts like having former Chicago Bears coach Mike Ditka at their Mortgage Bankers Association conference booth or having their own customer events. While I haven’t seen Ditka make a second appearance at a mortgage trade show, these initiatives to educate banks and forward lenders on the space seems to be paying off.
The challenge the industry must address is this: Can we teach other lenders to be successful in the reverse mortgage industry?
The reality is that we don’t really have much of a choice at this point. We continue to see large players exit the space and dream of the day Wells Fargo might return, but I for one can’t see that happening anytime soon.
Until the industry is able to encourage other lenders to take the business seriously, we will continue doing 50,000 loans a year for the foreseeable future? And let’s be honest — where’s the fun in that?
I’ll still be excited to see all the familiar faces at the upcoming NRMLA event in New York, but this new lender interest I saw last week may actually be the key to industry growth. It’s important that we all manage this interest from new players in the space and welcome them to the reverse mortgage industry with open arms.
