Credit unions have significant room to expand their reverse mortgage offerings as their memberships age, according to panelists who presented this week at the American Credit Union Mortgage Association (ACUMA)’s annual Make Your Mark conference in Las Vegas.
Ron Kamler, president and CEO of Alliance Reverse Mortgage, and Brandon Bartholomew, mortgage sales manager at Mountain America Credit Union, discussed the challenges and opportunities for credit unions who serve older homeowners.
At the start of the presentation, Kamler noted that of the nearly 36,000 reverse mortgages originated nationwide over the past 12 months, credit unions accounted for just 81 of them. He said that figure is also small compared with the roughly 55 million credit union members who are age-eligible for a reverse mortgage.
One root of the problem is that many borrowers are unsure of where to begin. Bartholomew said Mountain America began offering reverse mortgages after members started coming to the credit union with outside quotes and questions about the products.
“They trusted the credit union to help them and advise them as what to do, so that’s one of the reasons we started getting into reverse mortgages is to help them, because we saw how much they were being charged. It was outrageous what they were being charged outside,” he said.
Broader training and education
The Utah-based credit union initially employed one reverse mortgage loan officer. After that employee passed away in 2011, the credit union hired another reverse mortgage specialist. Around 2015, Mountain America began training all loan officers across its branches to discuss reverse mortgages with members.
Today, loan officers and branch employees receive training to identify members who may have questions about reverse mortgages and direct them to the appropriate resources, Bartholomew said.
That approach addresses a broader challenge for credit unions, Kamler said. Members may ask tellers or call-center employees about reverse mortgages, but these employees may not know how to respond.
Kamler cited instances in which credit union call-center employees told prospective borrowers that the institution did not offer reverse mortgages or suggested they search online for information.
For older homeowners, Kamler said, that can create a disconnect between the credit union’s relationship with its members and the financial products available to them.
Planning tool vs. loan of last resort
Kamler also said reverse mortgages are increasingly being used as financial planning tools rather than solely as products for homeowners facing financial distress.
“Twenty years ago, it was only for someone who’s out of money,” Kamler said. “It was a last resort program. Today, reverse mortgage is completely different. We’re serving members that are using it as a financial planning tool.”
He pointed to borrowers who may use a reverse mortgage line of credit as part of a long-term retirement strategy. Reverse mortgage credit lines can include a growth feature, although the amount available can vary based on interest rates and other loan terms.
For credit unions that lack the staff or expertise to originate reverse mortgages internally, Kamler said partnering with a specialized reverse mortgage company can provide another way to make the product available to members.
The need for education is particularly important as credit unions contend with aging membership bases, the executives emphasized to the audience. “There is a tremendous amount of room for improvement,” Kamler said.
