Layla Zulfa
Las Vegas, NV – Credit unions possess a substantial, largely untapped opportunity to expand their reverse mortgage offerings, a sentiment echoed by industry leaders speaking at the American Credit Union Mortgage Association (ACUMA) annual Make Your Mark conference held this week in Las Vegas. The conference, a key gathering for mortgage professionals within the credit union sector, provided a platform for discussions on the unique challenges and promising avenues for credit unions serving an increasingly senior membership base.
Ron Kamler, president and CEO of Alliance Reverse Mortgage, and Brandon Bartholomew, mortgage sales manager at Mountain America Credit Union, co-presented on strategies to enhance reverse mortgage penetration within credit union memberships. Their insights highlighted a significant disconnect between the growing demand for such products among older homeowners and the current limited engagement by credit unions.
A Stark Disparity in Origination and Membership Eligibility
The presentation began with a stark statistical overview. Kamler revealed that in the preceding 12 months, credit unions collectively originated a mere 81 reverse mortgages nationwide. This figure stands in dramatic contrast to the approximately 55 million credit union members who are of age-eligible to utilize a Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage. This data point underscores a significant gap between potential demand and actual product delivery.
This underutilization, panelists suggested, stems from a multifaceted issue, with a primary challenge being borrower uncertainty. Many older homeowners are unsure where to begin the process of exploring reverse mortgage options. Bartholomew of Mountain America Credit Union shared his institution’s journey into offering reverse mortgages, which was directly prompted by members approaching the credit union with external quotes and queries about the product.
"They trusted the credit union to help them and advise them as what to do," Bartholomew stated. "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." This observation points to a potential for credit unions to not only meet member needs but also offer more competitive and transparent pricing compared to independent lenders.
Building Expertise: A Phased Approach to Reverse Mortgage Education
Mountain America Credit Union’s strategic evolution in offering reverse mortgages serves as a case study for other credit unions. Initially, the Utah-based institution employed a single dedicated reverse mortgage loan officer. Following the passing of this initial specialist in 2011, the credit union hired another. However, a significant shift occurred around 2015 when Mountain America began a comprehensive initiative to train all its loan officers across its extensive branch network on reverse mortgage products.
This proactive training ensures that front-line staff are equipped to identify members who may have questions or express interest in reverse mortgages. These employees are now trained to effectively guide members to the appropriate resources and specialists within the credit union. This approach directly addresses a broader systemic challenge identified by Kamler: the lack of preparedness among general credit union staff to handle inquiries about specialized products like reverse mortgages.
Kamler recounted instances where credit union call-center employees, when approached by prospective borrowers, either stated that the institution did not offer reverse mortgages or advised individuals to conduct their own online research. Such responses, he noted, can create a significant disconnect for older homeowners, undermining the inherent trust and established relationship they have with their credit union and hindering access to potentially beneficial financial tools.
The Evolving Role of Reverse Mortgages: From Last Resort to Financial Planning Tool
A pivotal theme emerging from the discussion was the evolving perception and application of reverse mortgages. Kamler emphasized that these financial instruments are increasingly being utilized as strategic components of comprehensive financial planning, rather than solely as a product for individuals facing imminent financial distress.
"Twenty years ago, it was only for someone who’s out of money," Kamler explained. "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."
This paradigm shift is driven by the product’s inherent flexibility. Borrowers can leverage a reverse mortgage line of credit as an integral part of a long-term retirement strategy. These lines of credit often feature a growth component, meaning the available amount can increase over time, although this growth is subject to prevailing interest rates and other loan terms. This feature allows seniors to access equity in their homes while continuing to reside in them, providing a stable source of funds for unexpected expenses, healthcare costs, or simply to supplement retirement income.
Strategic Partnerships and the Imperative for Education
For credit unions that may lack the internal resources or specialized expertise to originate reverse mortgages, Kamler proposed strategic partnerships with established reverse mortgage companies. Such collaborations can serve as an effective avenue for credit unions to offer these vital products to their membership without the need for substantial internal investment in training and infrastructure. This approach mirrors successful models seen in other specialized lending areas, where credit unions partner with third-party originators to expand their product suites.
The overarching consensus among the panelists was the critical importance of education—both for credit union staff and for the members themselves. As credit union memberships continue to age, the need to proactively inform and equip members with knowledge about reverse mortgages becomes paramount.
"There is a tremendous amount of room for improvement," Kamler reiterated, underscoring the significant potential for growth and member service enhancement within the reverse mortgage sector for credit unions. This sentiment was met with acknowledgment from the ACUMA audience, indicating a shared recognition of the opportunity and a desire to explore more robust engagement strategies.
Context of the ACUMA Conference and Broader Economic Trends
The ACUMA Make Your Mark conference is an annual event designed to equip credit union mortgage professionals with the latest insights, strategies, and regulatory updates pertinent to the mortgage lending landscape. This year’s focus on reverse mortgages reflects broader demographic and economic trends. The aging of the Baby Boomer generation, coupled with rising home equity and evolving retirement expectations, has created a fertile ground for reverse mortgage products.
Data from the National Reverse Mortgage Lenders Association (NRMLA) consistently shows an increase in HECM endorsements, particularly among homeowners aged 62 and older who are seeking to supplement their retirement income or manage healthcare expenses. In the first quarter of 2023, for instance, NRMLA reported a significant number of HECM endorsements, signaling sustained demand. Credit unions, with their member-centric ethos and established trust, are uniquely positioned to capture a larger share of this growing market.
Implications for Credit Unions and Their Members
The underutilization of reverse mortgages by credit unions represents a missed opportunity on multiple fronts. For members, it means potentially accessing a valuable financial tool that could enhance their retirement security and quality of life. For credit unions, it signifies a chance to deepen member relationships, generate new revenue streams, and solidify their role as trusted financial advisors.
The insights shared at the ACUMA conference suggest a clear path forward:
- Invest in Comprehensive Staff Training: Equipping all member-facing staff with foundational knowledge about reverse mortgages is essential to capture initial interest and direct members appropriately.
- Develop Specialized Expertise: For those credit unions aiming for deeper engagement, investing in dedicated reverse mortgage loan officers or partnering with experienced third-party originators is crucial.
- Enhance Member Education and Outreach: Proactive campaigns to inform members about the benefits and mechanics of reverse mortgages, framing them as financial planning tools, can demystify the product and drive adoption.
- Focus on Transparency and Member Value: By offering competitive rates and transparent fee structures, credit unions can leverage their member-first approach to attract borrowers who may have encountered less favorable terms elsewhere.
The statistics presented at the ACUMA conference paint a compelling picture: credit unions have a substantial opportunity to serve their aging memberships more effectively by embracing and expanding their reverse mortgage programs. The shift in how reverse mortgages are perceived—from a last resort to a strategic financial planning tool—aligns perfectly with the evolving needs of a generation planning for longer, more financially complex retirements. By addressing the identified challenges of borrower uncertainty and internal staff preparedness, credit unions can unlock significant growth and enhance member well-being.
