Skip to main content

Senior Lending Network estimates 30 percent more seniors to qualify for or benefit from reverse mortgages

National Mortgage Professional
Oct 15, 2008

Forward on reverse: Reversing the credit crisis at World Alliance Financial: A conversation with CEO David Peskin (Part II)Atare E. Agbamu, CRMSreverse mortgage, David Peskin, World Alliance Financial, jumbo reverse loans , Simple60 Author's note: Many Forward on Reverse readers have been inquiring about my book, "Think Reverse," for months. I am pleased to announce that The Mortgage Press has been taking orders for the first printing since June. Please reserve your copy and download the first chapter at reverse.mortgagepress.com. A blog for readers' feedback on the book is in the making. Thank you. David Peskin knows how to seize a great business opportunity. He has maneuvered himself and his company from innovative reverse mortgage lead-seller to a nimble, top-five wholesale reverse mortgage lender in America within 18 months! In a grim credit market, where seasoned reverse mortgage leaders such as Financial Freedom, Bank of America and others are suspending jumbo reverse mortgage lending*, Peskin's World Alliance Financial (WAF) is forging ahead, making jumbo reverse loans and growing market share. In a sense, WAF is running where other reverse mortgage giants fear to tread. What is the source of this unusual strength in an abnormal credit environment for all lenders? Who is KBC? What is it up to in U.S. reverse mortgages? What is going on at WAF? To find out, I spoke to David Peskin. Below is the second part of our conversation. *Note: Major reverse mortgage lenders such as MetLife Bank, Generation Mortgage Company and others have not suspended their jumbo programs. Atare E. Agbamu: How many brokers do you have nationally? David Peskin: I believe it is around 500. AEA: How many of them are HECM advisors? DP: That does not include HECM advisors. Those are brokers and lenders. AEA: Tell us about some of your products. You have a very interesting product called Simple60. DP: There are two advantages to Simple60: It starts at [the] age of 60 and its closing costs are tremendously reduced. It is for consumers who want less cash. If you want as much money as you can get out of your house, then you are better off doing an FHA HECM loan. But if you only want, say $50,000 or $75,000, then our Simple60 is for you, because the closing costs are about half of an FHA reverse mortgage. AEA: What is the amount? DP: I think it is around $5,000 or $5,500. AEA: What do you say to those who say that a Simple60 customer can easily run out of equity when they truly need it in their late 60s, 70s, or 80s, or that age 60 is too young to start tapping into home equity through reverse mortgages? DP: When you start at age 60, you are actually going to get less access to the equity. In essence, it is almost the same thing as if you were 65. You are getting more access to the equity. All that happens is that we limit you to a little bit less equity in the home so by the time you are 65 or 66, it would match up to other products in the market. We are not giving you the same advance rate as you would if you were older. It makes it a little harder for that [customer running out of equity] to happen. AEA: I can see where it can be very useful. There are people, 60 or younger, who may have medical necessities. The doctors say: You have just six months to live, but you may live longer if you have so-and-so medication. They are out of cash, and the home equity is the only asset that is left. It has a place. From your research, what is the size of the Simple60 sub-market? DP: The market is as big, if not bigger than the FHA product. As the baby boomer generation comes in, they will be more interested in this product because it is much like a traditional home equity loan, which is, "Hey, I don't need a whole lot of money, and I don't want to spend a lot to get the loan." AEA: The index on this product is LIBOR of course. What is the margin? DP: The margin is four percent. AEA: And it is the one-month LIBOR, right? Now, tell us about your EquityPlus Advantage, your jumbo product. DP: Our product is very similar to all the other products. The difference is, we believe in the product, and we are going to continue to offer it. AEA: Even in this tight market? DP: Even in this tight market. AEA: Now, tell us about the flexible-margin HECM? DP: The flexible-margin HECM basically allows the broker to adjust the margin if they need to adjust closing costs for the customer. We've introduced a scale no different than what they do in the forward market. You can have a lower or higher rate based on loan costs. AEA: Please give us a scenario. DP: Let's assume someone wants to pay [a lower] origination fee. The broker can give them a higher rate and charge less of an origination fee if they choose to. AEA: That is, they can increase the margin, right? DP: Yes. AEA: Is the broker's discretion in setting the margin complete or is it subject to your review? DP: It depends on what the brokers submit to us. It is also what is comparable for their market. With CMT, LIBOR, multiple margins and market condition, what a broker makes on a CMT 100, they can no longer make. They've got to adjust accordingly to a higher margin so that they can make their profits. It is no different than three companies selling a TV. At one point, they will price each other out of the market. Then, sooner or later, they realize they've priced too low, and they begin to raise prices again. We have to make rate adjustments based on the market. AEA: Industry-wide, what are the trends you are seeing in this tough market? DP: On the wholesale side, people are competing on price. They are trying to get market share by pricing. That is not the right business model. All you are going to do is put yourself out of business. People need to understand that there are other ways to competeservice levels, technology, diversifying the business model a little bit [and] partnering with customers. It is not just all about price. I think that the industry is going to start to grow, and grow very quickly. Consumers are making decisions a lot faster than they were a year ago. Which means that it is not going to be long before this market takes off. AEA: You started in this business selling qualified leads about four years ago. Do you still sell leads? DP: We do, on a selected basis. AEA: Do you sell them to your brokers or to non-WAF brokers? DP: We sell them to our approved brokers. AEA: Exclusively? DP: Yes. AEA: Do you have any other thought you want to share with readers? DP: It is only a matter of time before the market has to open up again. Wall Street makes their money from securitizations. It is just a matter of when investors' appetite for buying assets is going to come back. And when they do, I think reverse mortgages are going to be on the very, very top of the list. AEA: Thank you, David. Atare E. Agbamu, CRMS formed ThinkReverse LLC to help originators address demographic change via reverse mortgages. A specialist with Credo Mortgage and a member of BusinessWeek Market Advisory Board, Atare is the first to propose reverse mortgages as risk-management tools for forward originators. Besides marketing, originating and researching reverse mortgages since 2001, Atare has authored more than 100 articles and a book on reverse mortgages. He may be reached by phone at (612) 203-9434 or e-mail atare@thinkreverse.com.
Published
Oct 15, 2008
Planet Home Lending Reports Total Origination Volume Of $6.8B In Q2 2021

Planet Home Lending's total origination volume reached $6.8 billion in Q2 2021, up 77% from $3.9 billion in Q2 2020.

Industry News
Jul 22, 2021
FHFA Ends Controversial Refinance Fee

The FHFA announced that Fannie Mae and Freddie Mac will eliminate the Adverse Market Refinance Fee for loan deliveries, starting August 1, 2021.

Analysis and Data
Jul 19, 2021
Interfirst Mortgage Launches ONE, Backed By Non-Owner Occupied Properties

ONE is a unique product built on a single interest rate with no adjustments and qualifies off the cash flow of the rental property.

Industry News
Jul 16, 2021
Global Digital Lending Market Projected To Reach $27B By 2028

The Global Digital Lending Platform Market was valued at $7.14 billion in 2020 and is projected to reach $27.07 billion by 2028.

Analysis and Data
Jul 14, 2021
FOMC Discusses Raising Interest Rates

Inflationary pressures have finally forced the Federal Open Market Committee (FOMC) to discuss raising interest rates and tapering its bond-buying program.

Analysis and Data
Jul 14, 2021
Fathom Holdings Inc. Creates New Hispanic Division

Fathom Holdings Inc., a technology-driven real estate platform, announced the creation of their Hispanic Division to more adequately serve this fast-growing demographic. 

Industry News
Jul 07, 2021