The biggest challenge for the reverse industry in 2024? Mortgage interest

Reverse mortgage activity – and mortgage activity in general – is not where people want it to be.

That was a repeated idea shared by a group of reverse mortgage lending professionals when they were asked to rate what they see as the biggest challenges facing the industry this year. With Home Equity Conversion Mortgage (HECM) volume declining year-over-year, many industry participants cited at least one key factor that could have driven the decline, but this view was not universal.

Rates, rates and tariffs

Mortgage rates were by far the most frequently mentioned challenge among the group of industry professionals interviewed HousingWire‘s Reverse Mortgage Daily (RMD) on the challenges of 2024.

Peter Sciandra, who serves as EVP of secondary marketing for reverse lending at Fairway Independent Mortgage Corp. noted: “High inflation and high interest rates unfortunately kept many borrowers on the sidelines. As the year went on, we heard a lot of talk from the Federal Reserve about starting to look at rate cuts in the second half of the year, and then we started to see some of those borrowers who were on the fence come out of the woodwork.”

That led to some improvement in sales in the third quarter, before enthusiasm for potentially lower rates seemed to evaporate. Rates once again emerged as a challenge and remain so as the year comes to a close.

But despite the challenges posed by interest rates, industry professionals continue to find a way forward. Bee New US financing (NAF) Reverse Mortgage Division Leader Shannon Robinson spoke about the need for perseverance in a high interest rate environment.

“It unfortunately remains the same story when it comes to our industry facing these challenges,” Robinson said. “We are seeing headwinds in the market and not really seeing much movement in interest rates. But we have continued to overcome these challenges. We’re going to get these loans where we have to look at every possible opportunity to save that deal and help that customer.”

Mortgage rate challenges haven’t derailed the industry either, said Jim Cory, director of reverse mortgages at Guild Mortgage.

“A lot of people predicted that if rates didn’t come down, we were going to have a very, very difficult year,” he said. “We had maybe two share price drops, but they didn’t drop significantly and it wasn’t as bad as anyone expected or predicted. I think that’s true from an industry perspective. We were resilient and even able to grow at Guild.”

Education and distribution

A long-standing challenge for the reverse mortgage industry remains marketing and messaging, especially in ways designed to overcome longstanding reputational hurdles that have plagued the company for years.

For Cory, education is tied to the industry’s broader challenge of broadening product distribution, he said.

“Distribution is one of the things we’re trying to solve at Guild,” he said. “And I think companies like Guild are trying to solve it for the entire sector. I just think that’s a very important point. As an industry, we really need to focus on increasing distribution as far as who can get the reverse mortgage.”

Robinson added that one of the ways NAF plans to address the messaging challenge is by spreading it across multiple platforms and divisions, including its company’s retail lending and field distributed sales divisions. This also feeds into conversations with referral partners and a potential borrower’s adult children, who are often a borrower’s most trusted advisors.

But growth can also bring a series of challenges. Bee loanDepotthe company has been working to grow its status more broadly, which has had an impact on the reverse mortgage division, according to Lisa Moriello, national retail reverse sales manager.

“We are expanding our reach and becoming a lead agent in many states,” Moriello said. “And we do that like we do everything else: very carefully. So for us that was both pleasure and pain. We are so happy to now be national lead agent, but it has been a long road to get there because we are very careful about the way we do things.”