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Reverse Mortgage Funding, LLC (RMF) is taking a new approach to the borrower qualification process for those seeking a reverse mortgage. The process was created to drive efficiency during the approval process and increase reverse mortgage market growth.
RMF operated on a typical qualification process, according to a report from Reverse Mortgage Daily, however, while analyzing that process the company was able to find a way to simplify it simply by the order in which they conduct the approval process.
“The way that I would think about this — at the highest level — is that I think most loan officers have approached qualifying borrowers not necessarily the wrong way, but not in the most efficient way,” said Joe Demarkey, strategic business development leader for RMF, according to RMD.
“Interestingly, the documentation requirements for these ‘traditional income sources’ are usually most voluminous, and are usually the hardest things to get from a borrower,” added Demarkey. “Think about somebody’s tax return, or trying to get somebody’s Social Security benefits awards letter or documentation to support your pension income. They’re usually the hardest to try to obtain.”
The company decided to take a new approach by starting at what would be the typical end of the approval process. Demarkey believes that rather than the traditional process of gathering traditional income information, moving to assets and ending with proceeds dissipation should be altered, according to the RMD report.
“We think they should reverse the order of those three categories,” he explains. “They should start by looking at proceeds dissipation, because there’s absolutely no documentation requirements that are needed from a borrower in order for us to dissipate loan proceeds. In other words, how much principal limit is thereafter we pay all the mandatory obligations that the borrower might have? Is there enough unused proceeds that if we dissipated over the borrower’s life expectancy, do they qualify just with loan proceeds dissipation alone? If they do, that’s fantastic news.”