Wendy, we met just a few short years ago and while I have been in the mortgage industry for 25+ years, I am amazed at how many terrific women leaders I am just meeting through the development of my professional services firm. I remember our first discussion and how struck I was by your accomplishments in such a short time at ReverseVision – how you have in essence pioneered a fintech solution for one of the most important financial vehicles available today – reverse mortgages. The timing of your work has matched the explosive growth we have seen in home equity levels and in many cases that equity has allowed seniors to age in place. Yet so many in our industry still lack an understanding of the value of reverse mortgages. So much to discuss …
Thanks for sitting down for today’s interview. Let’s talk through your journey but also take time to reintroduce our readers to reverse mortgages.
Faith Schwartz: Wendy, you are leading Sales & Marketing for a complex product. I always hear leaders talk about the ‘elevator pitch.’ That’s a tough one for HECMs, but how do you boil it down for our industry to get it?
Wendy Peel: The knowledge gap around Home Equity Conversion Mortgages (HECMs) is what makes people think reverse mortgages are risky or complicated, but at the end of the day a HECM is just another mortgage loan. All lenders understand the importance of FHA-insured lending programs that give first-time homebuyers the flexibility with down payment and credit score requirements that they need to get into homes. Likewise, many senior homeowners need flexibility in accessing their home equity to retire. Whether an older homeowner prefers to relocate or age in place, HECMs provide that flexibility.
From an operations perspective, the same staff underwriting traditional FHA loans can easily be trained to understand HECM guidelines. It is no more complicated than other specialty loans such as VA.
From a loan officer (LO) perspective, a HECM can and should be presented as an option to borrowers age 62+ just like any other loan. Good LOs understand having more lending options is better than only a few, especially as we transition away the last year’s unprecedented refi boom. Good loan officers also want to serve their customers at every stage in life (not just two-thirds of the way through) – a concept we call generational lending.
FS: Most of our readers see reverse mortgage and they automatically think a financial tool to enable a senior to age in place, but you are broadening the reverse attraction to novel uses such as HECM for Purchase. Tell us how the math works for a HECM purchase and what you see as the opportunity for that market.
WP: Aging in place isn’t for everyone and many homeowners feel compelled to move in their golden years, whether to be closer to grandchildren, to be near the beach or to downsize. In fact, an MBA review of HMDA data reveals that contrary to common belief, older consumers play a significant role in the housing market – with 1.6 million borrowers aged 62+ having taken out a residential purchase, refinance or HELOC loan in 2019 (representing $335.4 billion in total volume).
However, taking out a 30-year mortgage or paying cash for a home may not be the best option for retirement age consumers. Why? Because it either depletes their available cash pool or leaves them on the hook for monthly mortgage payments. With a HECM for Purchase, homeowners have the option to make full mortgage payments, smaller monthly mortgage payments or no monthly mortgage payment at all.
Leveraging the flexible repayment feature makes it easier for a buyer to afford the home they really want, preserve more savings and retirement assets and improve cash flow. HECM for Purchase also has a non-recourse feature, which means the borrower can never owe more than the home is worth when the loan is repaid.
Not surprisingly, financially savvy and secure people are leveraging HECMs in greater numbers. If a consumer’s Wall Street portfolio is performing at 10-20%, it’s more financially prudent to leverage 3-5% HECM for Purchase loan than it is to pay cash or withdraw money from a high-performing investment account to purchase a home.
FS: As you think about the market opportunity for reverse, and for those forward lenders wary of introducing too much complexity in their product offerings, how does ReverseVision plug and play and what is the learning curve?
WP: As an FHA product, underwriters have no problem learning to underwrite HECMs and loan originators (LOs) are always looking to add new tools to their lending toolbelt.
Similarly, putting reverse lending tools in the hands of LOs is simple. ReverseVision software is equipped with loan modelling and comparison calculators that help LOs compare the benefits of HECMs to “traditional” loan types. Our cloud-based, API-enabled platform can be leveraged with CRMs, POSs and LOSs, making it easy for LOs to continue working in their familiar software while serving Americans 62+.
What’s more, one of the things ReverseVision does exceptionally well is teach lenders how to offer reverse mortgages alongside traditional mortgages. Our support services are adept at helping lenders configure their workflows and tech stacks so they can realize the ROI of bringing reverse lending mainstream without excess overhead. At the end of the day, we’re not asking lenders to change the way they do business, we are simply challenging them to bring HECM loans “forward” to their senior borrowers (which typically represent 20% of their existing book of business) using the power of coexistence.
FS: You were just recognized with a PROGESS in Lending Trailblazer award. Congratulations! Well-deserved though because since you joined ReverseVision in January 2015, more than 4,300 lenders and brokers have enrolled in the ReverseVision platform. That’s huge! How did you do that?
WP: The reverse lending community has worked hard with regulators to improve the HECM product and enhance education around it.
To engage more originators in HECM lending, ReverseVision offers a free version of its software for brokering HECMs, which has increased platform enrollment and whet originator appetite for reverse mortgage programs. But what really excites me is the large number of mortgage bankers who are switching to the paid version because it indicates a large-scale shift in strategy to elevate HECMs as a staple lending product. The “aha” moment is happening and executives are realizing that the benefit of making reverse mortgages a staple is a no brainer.
In sum, ReverseVision has focused on transforming the perception of reverse mortgages through a combination of education, wholesale lender partner engagement and offering a free version of our technology. All of these things together have helped drive platform enrollment.
FS: We’ve talked often over the pandemic. I know work from home can be challenging to navigate. How have you managed?
WP: As a technology company, we already had the infrastructure in place to support our entire staff working from home. Information security requires pandemic planning as a staple in vendor audits. So when we made the decision to take our workforce fully remote last March, we executed the tactical transition in 24 hours without missing a beat.
But it would be disingenuous to say that transforming the way we work in the context of a global health pandemic has been easy. In fact, I don’t know a single leader who hasn’t been challenged with how to compassionately motivate a team whose personal lives have been upended by COVID. Like so many others, my team has been challenged by childcare/online schooling, getting sick and mourning the loss of loved ones. The last year has been a master class in leadership, compassion and motivation.
FS: As I look at your career, you have accomplished a great deal. What advice would you give to women entering our field? What lessons have you learned that you can share?
WP: I’m very grateful for my professional accomplishments and where I am in my career right now. My advice to women entering this field is to surround yourself with a circle of people who see you, want to see you succeed and can coach you forward. Having people in my corner lend me their confidence when I’ve had a hard time finding mine (as every human does from time to time), has made all the difference in the world. Find your cheerleaders.
I fundamentally believe in paying it forward to women entering the housing finance field. To achieve gender equity, more women need to be in positions of financial leadership. Home equity is the number-one way people build wealth and this industry benefits by having more women seated at the decision-making table.