With the hiring of a new Business Development Manager specifically dedicated to growing the Home Equity Conversion Mortgage (HECM) for Purchase (H4P) business, Fairway Independent Mortgage Corporation has chosen Reverse Mortgages for the purchase as a major initiative of the company to develop in 2022. To get a better idea of the depth of Fairway’s intention in developing this business segment, RMD spoke with the Country Director of reverse mortgages from the company, Harlan Accola.
It’s not a business priority without unique headwinds. Competing with traditional homebuyers, how aging-in-place goals for seniors might interact with home purchases, and existing conventional wisdom regarding aging-in-place are just a few of the topics explored in this article. conversation. It’s also possible, according to Accola, that the expansion of the H4P business could be a welcome development for millennials looking to find a home in which to raise a family.
H4P: ‘better’ than a cash offer?
While one of the key elements of competing with traditional homebuyers is the speed at which a loan can be closed, Fairway could have that element of the equation tied to a 17-day time frame to close H4P loans. This doesn’t happen in all cases, as Dan Hultquist, Fairway Reverse Mortgage Trainer, for RMD previously explained, but it is an active part of the business.
Another area where an H4P transaction may actually be considered a potentially better option for a licensed realtor is in offer verification, Accola says. While H4P transactions can often require up to 50% down payment on the total value of the new home, in this case it could actually benefit agents, Accola says.
“In Atlanta, one of our H4P clients beat 45 other deals because we could close on time and because we could prove he had the money and he had a loan,” Accola says. “Because after all, a 50% loan is better than cash because cash is often not even verified. There are many people who say they have a cash offer and then rush to get a loan in the process. They don’t really have $500,000 in cash.
In many cases, real estate agents aren’t required to verify that the borrower has the money they say they have, Accola says. This allowed for a dialogue with the agent about the potential benefits of going with the H4P client.
“What we explained to this real estate agent is that we have a better offer than cash because we have verified that our client has cash, and we have also verified that our loan can be made. within that timeframe,” explains Accola.
Since Fairway has a pronounced presence in term mortgages, many of the professionals who work there know how to properly manage relationships with real estate agents, he explains.
“Fairway has always been a purchase lender,” says Accola. “When COVID hit and refinances went crazy, we literally paused refinances for a month and said we were going to accommodate purchases no matter what. We’ve put off refinances for 60 to 90 days sometimes because we haven’t let the real estate agents down. Some mortgage professionals didn’t care because they had a lot of refinancing business. You have to deal with real estate agents.
Changing mindsets about aging in place
Accola also describes the need for a bigger shift from conventional wisdom about when and where older people should move, which would help build H4P activity. Many seniors who have prioritized aging in place may be doing so in a home that is not suitable for their retirement lifestyle, which could translate into accessibility and mobility issues for them. later in life, says Accola.
“Everyone thinks older people should move out at 85 and move into assisted living,” says Accola. “In fact, real estate agents who are senior real estate specialists have agreements with many assisted living centers. They miss the point, and I’m living it myself right now: I’m in a house designed for my retirement. We sold our house last year, the house we raised our four children in. It’s a big, big old house with six bedrooms and four bathrooms and a big yard for playing football in the garden does not correspond at all to our current way of life.
Accola and his wife wanted to move into a home more appropriate to their current lifestyle so they wouldn’t have to worry about moving later in life, and the result is that they live in a home more appropriate to later life. years, he said.
“We didn’t wait until we were 80 to fall down the stairs and break our hips,” he says. “You’re moving in your 60s, and there are so many real estate agents who see us as competitors because we’ll help 85-year-olds stay in their homes longer by helping them remodel the home or make alterations . [Agents might] think they’re gonna get a listing, and now these fucking reverse mortgages have happened and now these people are aging in place.
Could adopting H4P help younger generations find homes to raise their families?
Viewing reverse mortgage professionals as some kind of competition in this regard is counterproductive, Accola says, because if more seniors considered the H4P option to buy a more suitable home for them in retirement, it could contribute to add to the offer for the generation. now come and raise families, he says.
“[Real estate agents should realize] that we are their ally,” he said. “Yes, sometimes we help seniors to age in place. But we are their ally to make sure we get people out of [a house that doesn’t fit a retirement lifestyle]. Guess who bought our house? People with three children who want to raise their seven and nine year olds. This is not a house my wife and I should be in now.
If too many older Americans stay in the homes they lived in while raising their families, inventory could be negatively affected for younger families looking for homes, Accola says.
Supply remains a key issue for millennial homebuyers
The issues facing future millennial homebuyers are many, but one of those issues is housing supply. In a recent report on the CBS news program ’60 Minutes’, Redfin chief economist Daryl Fairweather described that a major issue preventing millennials from buying homes is the lack of supply. adequate.
“We’re not building enough housing for everyone who needs a place to live,” Fairweather told reporter Lesley Stahl. “We built fewer homes in the 2010s than in any decade dating back to the 1960s, and at the same time, millennials are the largest generation and they are entering the era of buying a home. House.”
Generally speaking, millennials no longer live with their parents, and they have stopped cohabiting with roommates, Fairweather said on the show.
“They want a place to call home, and we haven’t built housing for them in the last decade because we’re still so traumatized by the last housing crisis,” she says. “We have not invested in housing.
Accola sees increased adoption of H4P as a potential solution that could help older Americans find housing more appropriate to their retirement needs, which in turn would free up single-family housing for millennials who need it. hard to find them.
“Everything is on the same level: my office, my kitchen, my bedroom,” Accola says of his own move. “It’s designed so that I can still take steps with no problem, but it’s designed primarily for retirement. Get into a nursing home before you have to. This whole thought process needs to be changed.