All About Reverse Mortgage Lending

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MORTGAGE EXPERT
2 · 22 · 10

A bank that gave up on reverse mortgage lending at the beginning of the credit crisis has launched a new wholesale reverse lending channel, while another third-party lender hopes to help brokers focus more on the loan prospect’s product education and less on sales. An originator and an issuer of reverse mortgages reported big growth, and a service provider is promoting a list of reverse mortgage prospects who are delinquent but have loan-to-values less than 60 percent.

VirtualBank announced this month it expects to re-open its reverse lending business between March 5 and March 10. The company, headquartered in Palm Beach Gardens, Fla., originally formed Seniors Lending Group in late 2006 using proprietary products. But the unit was disbanded in late 2007 “due to market conditions.”

Now, VirtualBank said it has re-entered the reverse mortgage market through VirtualBank Senior Lending Group. The original senior management team led by Al Rodriguez was brought from three years ago. Rodriguez noted in the statement that company research indicates there is strong national demand from reverse mortgage originators for “additional wholesale delivery options from a stable, federally regulated financial institution with a client-centered culture.”

Also earlier this month in Florida, New Beacon Financial announced the launch of its reverse mortgage division product, Reverse123. The Boca Raton-based commercial and residential correspondent lender said it is aiming for a more consultative approach to marketing with a broker training program that focuses more on educating the consumer rather than “selling” the loan.

New Beacon’s reverse mortgage media campaign includes a television commercial aimed at educating seniors on the details and benefits of reverse lending.

San Francisco-based Patelco Credit Union, San Diego-based USA Fed, and Grossmont Schools Federal Credit Union now utilize the services of Golden Gateway Financial, according to an announcement from the Oakland, Calif.-based company. In addition to reverse mortgage brokering, Golden Gateway says it provides reverse mortgage information, tools and products. Among more than 1 million credit union members now using the national service are members of Boeing Employees Credit Union.

Synergy Marketing Group announced the availability of an updated database of seniors in Texas who are currently late on their mortgage payments. Synergy said the borrowers are over 62 years old, have a current loan-to-value under 60 percent and are at least 30 days late on their mortgage payments. The exclusive list is compiled largely from Trans Union and Experian’s database and is being offered to HUD-approved lenders.

Sun West Mortgage Co. reported late last month that it has issued more than $2 billion in HECM mortgage-backed securities. The Cerritos, Calif.-based company credited the increase to ReverseSoft, a proprietary reverse mortgage system that automates the reverse lending process.

Generation Mortgage reported home-equity conversion mortgage volume increased 182 percent between 2008 and 2009. The growth reportedly made the privately owned firm the fifth largest U.S. reverse lender last year.

Atlanta-based Generation projects a further increase in this year’s production. In addition to its brokers, growth was attributed to its approval as a Ginnie Mae servicer and obtaining issuance authority.

The Honolulu Advertiser reported that a senior citizen in Aiea, Hawaii, was defrauded out of at least $750,000, which included a fraudulent reverse mortgage taken out by a female acquaintance who had durable power of attorney. The state Department of Human Services Adult Protective Services is reportedly investigating the incident, while new legislation is in the works to make it more difficult to obtain a power of attorney.

Reverse mortgage lender American Advisors Group last month quoted its spokesman, 83-year-old actor Peter Graves, as saying he is concerned seniors are not receiving the right message about reverse mortgages and that negative publicity could turn seniors off to a financial product from which they could really benefit.

But Irvine, Calif.-based American Advisors was one of two mortgage brokers accused in lawsuits filed earlier this month by Illinois Attorney General Lisa Madigan of using deceptive marketing to target senior citizens for reverse mortgages. Madigan noted that the many of the firms’ customers didn’t know that the advertised offers were for reverse mortgages.

Michael Banner became the first Florida-approved instructor for a three-hour continuing education class for Realtors on the reverse mortgage program for purchase transactions, a news release said. Banner is founder and owner of Clearwater, Fla.-based LoanWell America and founder of The C.E. Institute of America.

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