As the Reverse Mortgage industry strives to attract conventional mortgage lenders to the market, the year ahead offers opportunities for banks and other non-industry lenders to get involved in the space, according to one traditional mortgage professional.
Rob Chrisman, consultant with Capital Markets, Chrisman LLC, will participate in the Special Speaker Session at User Con 2017 on Thursday, February 9. A frequent commentator on the mortgage market, Chrisman will provide a unique perspective on traditional mortgage lenders’ views of the reverse mortgage industry and their potential actions and involvement in 2017.
Similar to the reverse mortgage sector, which saw significant program changes in recent years, the forward lending arena has been operating in a period of ongoing regulatory scrutiny.
“Everything has been a constant battle and continues to be a battle in terms of litigation and settlements that have been going on today between investors and regulators,” Chrisman told RMD. “From lenders’ perspectives, the last thing they want to do is incur anymore wrath from public or government regulators.”
This stifling environment, in which banks are overtly cautious about headline risk, is discouraging companies from adding new products. But certain market forces may soon find more banks welcoming to the idea of diversification.
A rising interest rate environment, where margins are getting squeezed, could serve as an opportunity for banks and mortgage lenders to be more open with the idea of bringing new products into their offerings, including reverse mortgages, Chrisman says.
“With 10,000 people each day turning 62, it’s a hard demographic to argue with,” he says. “The question companies now have is: how can we take advantage of this in a compliant manner that doesn’t subject us to regulatory scrutiny?”
Chrisman began his career in mortgage banking—primarily in capital markets—in 1985 with First California Mortgage, assisting in Secondary Marketing.
With more than three decades of mortgage industry experience, he has held various executive positions, including president of OnCall Mortgage, which was acquired by Wells Fargo Bank in 2000; director of secondary marketing at CMG Mortgage, a wholesale mortgage bank; and serving as director of capital markets at RPM Mortgage, a retail residential lender.
Currently, Chrisman serves on the board of directors for several organizations, including Peoples Bank, a mid-sized depository in Kansas; Inheritance Funding Corporation, a financial services company which advances capital to heirs; as well as International City Mortgage of Axis AMC; and the California Mortgage Bankers Association.
Additionally, Chrisman is also a senior associate of the STRATMOR Group, and of the Mortgage Bankers Association of the Carolinas and its membership committee.
In his experience, Chrisman finds lenders have traditionally viewed reverse mortgages through a “volume-driven” lens, in which closing a only a few reverse loans each month may be seen as a tougher sell when convincing banks to adopt the product.
“For a forward industry that is focused on volume, to have somebody have a great month and do 3-4 [reverse] loans is a hard concept for some to grasp, and so the traditional measures of forward lending don’t really apply to the reverse mortgage side,” he says. “There’s a bit of a learning curve involved that some companies may or may not want to go through.”
But this doesn’t mean all is lost for the potential of banks and forward lenders expanding into the reverse market. At the end of the day, this decision will ultimately rely on education of management teams And this education must start at the top executive level, as well as how bank and traditional “forward” lenders entering the space could benefit or impact the reverse mortgage industry.
“I would think that some of the forward LOs out there who are going to watch the refinance business go away may want to take a look at what’s involved and perhaps embrace the reverse mortgage business given the demographics,” Chrisman says. “It has to begin with management’s acceptance and seeing the logic of offering this kind of product.”
ReverseVision User Con 2017 takes place February 8-10 at the Hilton San Diego Resort & Spa. For more information about this year’s event, including a daily schedule of conference sessions and how to register, visit the User Con 2017 webpage.
Written by Jason Oliva
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