In the past week, Fairway Independent Mortgage Corporation announced the hiring of Tane Cabe as its new Reverse Business Development Manager with a focus on the Home Equity Conversion Mortgage (HECM) to Purchase (H4P) business. Relative to the other top 10 reverse mortgage lenders, Fairway stands out for making a concerted effort to cultivate more H4P business in an environment where many other reverse mortgage companies have spent much of the last 12-18 months focused on HECM. -to-HECM (H2H). ) refinances, according to data compiled by Reverse Market Insight (RMI).
H4P is a major company initiative for Fairway, which hopes to increase its purchase volume investment in the short term in hopes of transforming the space over a 10-year period, and with a level of speed that the lender says is not possible. has equal in Arena H4P compared to the competition. To get a better idea of the role H4P will play in Fairway’s plans, RMD met with its National Director of Reverse Mortgages, Harlan Accola, and its National Reverse Sales Training Specialist, Dan Hultquist, to learn more about the importance of H4P to Fairway’s future plans.
H4P Low Uptake Diagnosis
According to data compiled by RMI, H4P’s total volume share of the entire reverse mortgage industry represented just 4.2% of all endorsements in 2021. Because Fairway gets most of its reverse mortgage business from referral partnerships, reaching out into the buying market made sense to Fairway because of the partnerships its loan officer corps has spent so much time developing, according to Hultquist.
“In some cases, most of our loan originators have been building referral associations for decades,” says Hultquist of Fairway’s LO body. “So, they know the local real estate agents. Much of the business in our industry is generated through call centers, but call centers do not have the ability to build relationships with local real estate professionals. Some of them have boots on the ground [and] feet in the street. But for the most part, we already have those relationships, so it’s natural for us.”
Since so much of the reverse mortgage business is generated through call centers, that creates a natural aversion for some real estate agents to even engage in the reverse mortgage category, Accola adds.
“Real estate agents hate dealing with call centers,” he says. “[They also] I don’t like FHA loans, because now that creates the amendment clause, and more inspections and things like that. So real estate agents automatically get nervous [about a HECM being] an FHA loan. And then they get nervous if someone is trying to make this loan from a phone room somewhere that doesn’t have as much skin in the game as someone in the community who they can see going into their office.”
As with many aspects of the reverse mortgage industry, it also comes down to general awareness, adds Hultquist. Not only are real estate agents largely unaware of the fact that the H4P program exists, they are also misinformed when it comes to the HECM program itself.
Fairway H4P: differentiation through speed
Some other leading reverse mortgage lenders contend that H4P uptake will remain low until real estate professionals and homebuilders understand that such loans need to take longer to originate. However, Fairway says that to be competitive with its commercial term mortgage arm, they can close their H4P loans in as little as 17 calendar days instead of the more typical 45 to 60 days.
“Fairway has a number of things that allow us to move this fast,” says Hultquist. “Our referral associations are also established on the advanced side, and we have to protect those associations. So if there is a HECM to Buy, they are immediately alerted. Our operations team has streamlined it to the point where we can do it, sometimes even with a second evaluation. Now, we can’t do it all the time. But the goal is to close it in 17 days, except in North Carolina, which is not possible by law.
Due diligence is also a priority for Fairway, says Hultquist, and the lender encourages certain needs.
“We also enforce certain protocol for purchase transactions,” he says. “For example, why would I wait to get your advice while looking for a house? Get his full advice. We insist that if a client is looking to buy a home, get the advice and do it today. Because we don’t want to take an application, send them counseling instructions, and then be another week late. We can’t afford it if we’re going to stick to 17 days.”
Competitiveness in US Real Estate Markets.
Due to the realities of real estate markets across the country, speed is a primary concern in making a reverse purchase a viable consideration when competing with buyers who may have cash on hand for a home purchase, Accola explains.
“The issue is that you have to do it. [quickly], especially in a competitive market,” he explains. “Who will accept a [slower H4P] offer when they have cash offers and term offers that will close in three weeks? we can not [make an offer that will take] six or eight weeks.
The nature of competition among homebuyers requires a faster focus on the H4P business and informs the progress Fairway has made in this segment, Accola explains.
“The reason we came up with a 17 day plan [timeline] It wasn’t racing anyone else, it was racing our front side because that side is fast,” says Accola. “So we couldn’t get our loan officers to talk about reverse purchases because if it took 45 to 60 days, they wouldn’t talk about it. One of our 10 values is speed. So we are very concerned about closing on time and getting the documents sooner, which is why we have closed hundreds of them in 17 days or less.”
Look for more on Fairway’s efforts in the H4P business next week on RMD.
