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Q&A: FAR's Sieffert talks about the reverse mortgage industry's commitment to education and broadens the home equity debate

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Finance of America Reverse (FAR) is a top 10 originator and leader in the reverse mortgage industry through informational partnerships and unique product development. But despite these advances, the continued need to continue providing meaningful education to borrowers is something that FAR has consistently pursued, like most other major industry players.

To assess how these initiatives are currently progressing, RMD sat down with FAR President Kristen Siefert to discuss the nature of the educational activities FAR is conducting and how such initiatives are growing the business. and discussed her own philosophy on revisiting the conversation about home equity and retirement. very regularly.

RMD: Where do you see most of these misconceptions in your business regarding what other segments of the housing industry misunderstand most in the reverse mortgage business?

KS: I think it’s the same thing that has been rampant in the industry for years. This is a misconception that this product is best suited as a last resort loan, or that it is best suited for people whose plans are poorly planned. Have. I was with some of the traditional mortgage originators earlier this week, and in addition to their belief that these are last resort loans, they think of their products the way many consumers think. increase.product, i.e. [based on its attributes from] 10-15 years ago.

We all know that over the last few decades there have been big changes to the contrary. This product has really created a great sustainable option for many different borrowers. Used as a tool to produce better outcomes throughout retirement planning. That’s where the product stands today for people properly educated about it.

Kristen Siefert

RMD: How much effort do you think goes into correcting product and industry misconceptions, both in your company and the industry as a whole?

KS: Personally, I feel that changing perceptions has become my life’s mission. I think FAR in general has launched a number of initiatives to improve access to product education. First and foremost, I think we need to educate people to make the best decisions instead of making decisions based on ideas and misconceptions.

[Some strides include] Arrangements with the Stanford Center on Longevity and research on the use of reverse mortgages to reduce portfolio market risk by the Urban Institute and the Journal of Financial Planning. Looking at all the avenues we serve, [in order to] Building relationships and educating a more trustworthy entity can really make a difference for financial planners, mortgage professionals and borrowers. Ultimately, I think this job is our number one priority. It’s been a long road, but I think there’s still a long way to go.

RMD: Education is a big focus of the industry, so do you think your personal tolerance for having to repeat so many product details is generally high? Conversational or sometimes jarring?

KS: I enjoy it. And I think it’s important not only to talk about how current products work, but also to talk openly about why they have a bad reputation. There was an aspect of the product that really created some of the coverage.

At some point I wasn’t proud of some things that were going on in this industry. there is [formerly problematic qualities] Since then. Again, I feel it’s my life’s mission to really look at every sector of the industry and make sure we’re creating products that provide sustainable and lasting solutions for consumers. .

By doing so, we can create a sustainable and lasting industry. Looking at the landscape around us, I believe that the availability of home equity is a much-needed feature and will be required even more in the future. is our responsibility as an industry.

RMD: In terms of the current economic climate, the housing industry in particular seems to be going through a pretty tough time with historical levels of inflation and a volatile interest rate environment. How do these realities become most apparent to FAR and the industry at large?

KS: It felt like the perfect storm for the mortgage industry in general. I think the industry as a whole is working as quickly as possible to ensure that all companies are well-positioned to navigate through the current market dynamics. More interestingly, I think it’s also the perfect storm for demographics. If you look at where retirees are, their current lifestyle and life cycle, if they have a portfolio they are in the drawdown stage of their portfolio. The market volatility going on and the rapid decline in people’s portfolio valuations is terrifying.

In addition, rapid inflation hit bond users hard. Going to the grocery store or getting gas puts a lot of pressure on people. One of the biggest things our demographic did when they felt they needed to create another cash flow for themselves was to scale back. But look at the market and very few in stock. Downsizing these days doesn’t necessarily mean finding a cheaper home.

I think there is an opportunity to see a growing interest in people looking to understand how reverse mortgages can help, especially when all these dynamics seem to be working against them. 1 area [which remains] A bright spot for some is home equity. Finding ways to use home equity to reduce financial pressure will probably be a top priority for many.

And for those who can afford home equity payments and do things like HELOC, that’s great. Hmm. That makes reverse mortgages a very sophisticated solution for those who have never seen one before.

RMD: The larger Finance of America organizations have invested heavily in diversifying their product portfolios. Do you think FOA borrowers will have more flexibility if they suddenly have to pivot to another product based on their particular economic realities?

KS: Yes. I think when we went out to create the reverse mortgage product suite that we have, we were always trying to address a gap in the market. You and I talked about this when we launched HomeSafe a few years ago. The industry wasn’t doing much production when the product was first launched. [loan-to-value ratios] decreased considerably. HomeSafe has become a big part of our overall business and has been on the market for a long time, giving it a unique position.

So, operationally, we were able to accommodate that capacity increase. Looking at what’s happening in the markets around us right now, HECM LTV is declining as the interest rate environment rises. The LTV of our own products and conventional products has also been on a downward trend recently. And looking at the potential impact of pipelines based on these changes, one bright spot for us is EquityAvail. It’s a product that hasn’t gained a lot of traction yet because it’s still very new. I have. If his LTV changes significantly on the reverse product, EquityAvail appears to be able to fill that market gap that other products cannot.

To answer your question again, yes. Our product suite was purposefully built to address these gaps. And when markets change unexpectedly, it’s often interesting to see that there are products that shine that may not have been there before.

Editor’s note: This interview was originally August 2022 issue of the housing wire magazine.