Reverse Mortgage Funding president on unlocking a trillion-dollar market
He emphasizes the importance of being a home equity educator
The COVID-19 health crisis has made many senior homeowners reassess their priorities during the last two years. To keep up with the shift in their customers’ needs, reverse mortgage providers had to wrestle with a number of challenges and come up with new strategies to help seniors retire comfortably in the safety of their homes.
Mortgage Professional America asked David Peskin (pictured), president of Reverse Mortgage Funding, about how he keeps pace with the changes in the reverse mortgage field and his perspective on what lies ahead for this sector.
MPA: How did your reverse mortgage career start, and what attracted you to the sector in the first place?
DP: In 2002, while the housing market was experiencing a refinance boom, I noticed that many older Americans were experiencing a house rich, cash poor scenario. They didn’t have enough liquid assets or income to fund the retirement lifestyle they desired, yet they had large amounts of equity in their homes. This prompted many to take out loans to access cash, and, unfortunately, these loans were often not the right type of product for these borrowers based on their retirement needs.
With a HELOC or a conventional loan, pulling money from the home increases a borrower’s monthly payment obligation. With a reverse mortgage, a retiree can gain complete control over how they pay their principal and interest. I knew I wanted to enter the reverse mortgage business so I could help borrowers understand the power of using a reverse mortgage to tap into the equity in their homes. I could see the potential for reverse mortgages, which are specifically designed to help older Americans, to provide this demographic with the flexibility they need to control their monthly mortgage payments and finance the retirement lifestyle they’d dreamed of.
MPA: What are some of the biggest challenges you have encountered throughout your 26-years of experience in the reverse mortgage industry?
DP: The pandemic posed one of the biggest challenges I’ve experienced during my career. While the team here at Reverse Mortgage Funding (RMF) shifted quickly to working in the virtual environment, we needed to ensure we could still safely and effectively serve our customers, many of whom were used to having face-to-face meetings with our loan officers. We also knew that older Americans were navigating their finances in a very uncertain economy and that reverse mortgage products could be the right solution for many of them.
During this time, many older individuals began exploring how they might finance in-home healthcare in order to age in place in the comfort and safety of their own homes. This became a top priority for many senior homeowners during the pandemic. The RMF team began to educate homeowners, family members, financial advisors—anyone who helps address financial matters for seniors—about how home equity can be used strategically to help fund this type of care.
MPA: To get to where you are today, what’s the one thing you and your team had to consistently execute over the past few years?
DP: Hands down, the most important thing the RMF team has done consistently is adapt quickly and listen to the customer. The pandemic caught all of us by surprise, and many companies in the mortgage industry were caught flat-footed, unprepared, and slow-moving to meet the moment. RMF adapted quickly to a virtual environment, which helped position the company to recruit and retain talent, as well as better serve our customers’ changing needs.
While the transition to a virtual work-from-home environment was quick, we invested in tools to maintain our people-first work culture. We created an employee experience intranet site that provides opportunities for fostering community through sharing news, posting promotions, and celebrating birthdays and work anniversaries. The site is key to offering the human touch aspect that was once more easily accessible in person. This change, combined with other avenues of internal engagement, including quarterly town hall meetings and virtual team building activities, has been fruitful for the overall health of the company.
MPA: What are the most important skills that every HECM loan originator needs to have as they meet with seniors?
DP: The most important consideration for every HECM loan originator is to see themselves as a home equity product educator. Reverse mortgages are specifically tailored for older individuals to meet their changing needs and goals, but, oftentimes, older individuals don’t know about all the options available to them. As an industry, our goal is to help seniors and their advisors understand how to use home equity as a strategic part of retirement planning. This flexible solution can be used to finance home improvements, pay off pre-existing debt, insulate a retirement portfolio, or even purchase a new home. As consumer interest in HECM loans grows, it’s important for each HECM originator to be their clients’ trusted home equity finance educator.
MPA: What is your outlook on the prospects of the reverse mortgage space this year?
DP: The population of older homeowners with a first mortgage is growing by over one million per year, and, because of this, I believe we will continue to see reverse mortgages grow in demand. Additionally, the number of older homeowners looking for smart financial solutions that allow them to age in place continues to increase. The current senior demographic has the highest home equity levels in history, and we will continue to see more of them tapping into this equity to fund retirement. We’re also seeing more consumer awareness of HECM products. RMF, our trade association NRMLA, and our peers in the industry will continue to prioritize education campaigns for consumers and their advisors. Lastly, product innovation will play a major role in the future of financing for older homeowners. As RMF expands its proprietary Equity Elite product, this will allow us to continue to fill the void left by the FHA reverse mortgage loan.
While no-one can truly predict where the economy will be in the short or long term, we do know that retirees are very concerned about inflation, volatile markets, and general economic uncertainty. As we’ve seen the past few years, those in the industry that adapt the quickest to market shifts and consumer needs will lead the industry’s growth.