If you're working in the mortgage business and looking for a new challenge, try working backwards -- in the reverse mortgage end of the industry. The increased volume in these types of loans, fueled in part by an increase in the number of elderly homeowners, has created openings in the field for originators, processors, underwriters and secondary marketers.
In the federal fiscal year that ended September 30, 2008, more than 112,154 federally insured reverse mortgages were made nationwide, an increase of about 4.3 percent from the previous fiscal year, according to the National Reverse Mortgage Lenders Association.
Reverse mortgages give a borrower either a line of credit or a fixed monthly payment. In exchange, the borrower pledges the proceeds from the sale of his house after he dies, sells the house or moves. It's a product being marketed to 20 million seniors who own their own homes, holding about $2 trillion in equity, says Tom Scabareti, vice president of marketing for Financial Freedom Senior Funding.
Both Ends Busy
Business is humming along in the reverse mortgage market, says Jeffrey Moulton, national marketing manager for Wells Fargo Home Mortgage. "There's certainly going to be an extraordinary growth demand as far as operations and sales," Moulton says. "We're struggling with maintaining our growth. Loan volume is outpacing our operations organization."
Is it tough to switch from the traditional mortgage market to the reverse market? "If someone has previous experience in traditional processing, that would be all that would be necessary," Moulton says. "Because of our consistent demand for operations staff, we train. And people who start in processing move up into underwriting."
Loan Officers with Patience
With 7,000 loan officers on its payroll, Wells Fargo has seen plenty of originators who've made the switch to reverse products. About 75 percent of them successfully capitalize on the niche.
Still, traditional market loan officers are not Moulton's first-choice job applicants. "I would prefer to have a social-services type person, he says. I wouldn't go out of my way to look for a churn-and-burn loan officer. They struggle with the system."
Those with a strong sense of empathy tend to thrive as reverse mortgage loan officers. "All of our research tells us that buyers of these products look for people they can trust who are credible," Scabareti says. Financial Freedom has hired loan officers who were seniors themselves, but most originators are in their 30s and 40s.
Patience is also vital. "It's a very long sale. You may talk to 30 people who think it's a great idea, but they're not ready to take the step for years," he warns.
Loan officers working the reverse market typically earn $40,000 to $60,000 a year, with top producers earning low six-figure incomes, Scabareti reports.
Not Your Typical Automated Underwriting
If you're in underwriting and you move to the reverse market, be prepared to work with tools you haven't used in a while: paper and pencil. "If you've underwritten traditional loans, the reverse mortgage is significantly easier, because there is no income, asset, credit, employment or asset requirement," Moulton explains. Instead, the loan is based on the borrower's age and existing mortgage loans. "The reality is someone who has underwritten traditional loans will currently find the reverse mortgage somewhat frustrating. We don't have a lot of the technology that the traditional market has created."
If you're in servicing, you'll find the reverse market is dominated by only a handful of firms. "Only three organizations have active servicing components where they're purchasing closed loans from other lenders," Moulton says. "A few originators are [servicing their own loans]. We maintain ownership of the loans and pay a subservicer."
A Job with a Future
No matter where you work in the reverse market, one thing is pretty clear. You're going to have more potential customers in the years ahead. Americans are living longer, and the oldest of the Baby Boomers are starting to reach that magic age of 62 when they qualify to take out reverse mortgages on their homes. Get into the reverse market today, and you'll be ready to make the most of coming demographic changes.