Inside Fairway’s bold plan to boost reverse purchases
Last week, Fairway Independent Mortgage Company announced the hiring of Tane Cabe as the new Reverse Business Development Manager with a focus on Home Equity Conversion (HECM) Mortgages for Purchase (H4P). Compared to other top 10 reverse mortgage lenders, Fairway stands out by 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 focus on HECM to HECM (H2H) refinances, according to data compiled by Reverse Market Insight (RMI).
H4P is a major corporate initiative for Fairway, which hopes to increase its inverse for near-term purchase volume with hopes of transformation in the space over a 10-year period, and with a level of speed that the lender claims to be unmatched in the H4P Arena compared to competitors. To get a better idea of just how big a role H4P will play in Fairway’s plans, RMD sat down with its National Reverse Mortgage Manager Harlan Accola and National Reverse Sales Training Specialist Dan Hultquist to find out. more about the importance of H4P to Fairway’s future plans.
Diagnose low H4P absorption
According to data compiled by RMI, the total share of H4P volume in the entire reverse mortgage industry was only 4.2% of all endorsements in 2021. Since Fairway derives most of its business from lending reverse mortgages from referral partnerships, expanding into the buy market made sense for Fairway because of the partnerships its corps of loan officers has spent so much time developing, according to Hultquist.
“Most of our loan originators have built referral partnerships over decades in some cases,” Hultquist says of Fairway’s LO body. “And so they know the local real estate agents. Much of our industry’s business is generated through call centers, but call centers lack 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 a lot of reverse mortgage business is generated using call centers, this creates a natural aversion for some realtors to even engage in the reverse mortgage category, adds Accola.
“Realtors hate dealing with call centers,” he says. “[They also] don’t like FHA loans, because now it creates the amending clause, and more inspections and stuff like that. So real estate agents automatically get nervous [about a HECM being] an FHA loan. And then they get nervous if somebody tries to make that loan from a phone room somewhere that doesn’t have as much skin in the game as somebody who’s in the community that they can see by going to their office.
As with many aspects of the reverse mortgage industry, this is also a general awareness, adds Hultquist. Not only are real estate agents largely unaware of the existence of the H4P program, they are also underinformed when it comes to the HECM program itself.
Fairway H4P: differentiation by speed
Some other leading reverse mortgage lenders argue that H4P adoption will continue to be low until real estate professionals and homebuilders understand that these loans need to take longer to originate. However, Fairway says that to be competitive with its term mortgage line of business, they can close their H4P loans in as little as 17 calendar days instead of the more typical 45-60 days.
“Fairway has several things in place that allow us to move so quickly,” says Hultquist. “Our referral partnerships are also set to the advanced side, and we need to protect those partnerships. 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 assessment. Now we can’t do it every time. But the goal is to close it in 17 days, except in North Carolina, which the law does not allow.
Due diligence is also a priority for Fairway, Hultquist says, and certain necessities are encouraged by the lender.
“We also apply certain protocols for purchase transactions,” he says. “For example, why would you wait for advice while looking for a house? Get your board completed. We insist that if a client is considering buying a home, get the advice and do it today. Because we don’t want to accept a request, send them the counseling instructions, and then be another week late. We can’t afford it if we stick to 17 days.
Competitiveness in US real estate markets
Due to the reality of real estate markets across the country, speed is of paramount concern in order to make a reverse purchase a viable consideration when competing against buyers who may have cash on hand for the sale. buying a home, says Accola.
“The problem is that it has to be done [quickly], especially in a competitive market,” he explains. “Who will accept a [slower H4P] offer when they have cash offers and forward offers that close in three weeks? We can not [make an offer that will take] six or eight weeks.
The nature of competition among homebuyers necessitates a faster approach in H4P cases and informs the progress Fairway is making in this segment, Accola says.
“The reason why we proposed a 17-day period [timeline] was not to compete with someone else, it was to compete with our striker because that side is fast,” says Accola. “And 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. And so, we are very concerned about closing on time and delivering documents before, so we have closed hundreds of them in 17 days or less.
Look for more information on Fairway’s efforts in the H4P business next week on RMD.