Where senior homeowners fit in the lending lifecycle

Name: Where senior homeowners fit in the lending lifecycle
Uploaded: 2026-09-09T08:00:02+00:00
Duration: 22 min 57 s
Channel: HousingWire

00:08Welcome, everyone. My guests today on this sponsored episode are Jonathan Skarpatti,

00:13Chief Production Officer at Finance of America, and Scott Norman, CEO of the Texas Mortgage

00:19Bankers Association, to talk about the record home equity levels many older homeowners have

00:24and how lenders can provide real opportunities for seniors to tap that equity and manage their

00:29wealth in a way that supports what they need today and tomorrow. I'm excited to talk to you both

00:34again. So Scott, Jonathan, welcome back to the podcast. Thank you for having us, Sarah. Glad to

00:42be here. It's great to talk to two experts about this that we know is such a huge topic. So

00:48Scott,

00:48I'm going to start with you. You know, lenders often talk about waiting for the market to return

00:54to normal. By normal, they usually mean lower rates, maybe more inventory, better affordability,

00:59and a meaningful rebound in purchase and refinance volume. Is it risky to build a growth plan around

01:05that kind of recovery? Well, first off, Sarah, thank you for inviting me on. I appreciate HousingWire

01:11having such a unique conversation about this. I probably would answer your question maybe a little

01:16bit differently. I think I would start off by saying it is expensive to grow old in America. And so

01:23I don't

01:23know if I look at a reverse mortgage product through the lens of what rates are going to do in

01:30the

01:30future, I would look at it more so in the light of 10,000 people are aging into retirement every

01:37day.

01:38And so regardless of where the world is six months from now or six years from now, there's a amazing

01:45amount of untapped home equity for people who are age 62 and over, or in some cases, even 55 and

01:51over,

01:51that are looking for ways to stay in their house and access their own home equity for home health

01:57care, prescription drugs, property taxes, and the like. So I don't think I really

02:04appreciate the idea of what rates may do and betting on a marketplace that may or may not be there.

02:11I look at the marketplace that is here today, and it's only going to get bigger every hour of every

02:17day

02:17for the foreseeable future. I also think if anyone was betting on a quote unquote normal anything

02:24since like 2019, I think we'd all be disappointed. Fair enough. There's no normal, right? So let's

02:33talk about that home equity that people have. So the Federal Reserve, it puts total U.S. homeowner

02:38equity at about $34.9 trillion in the first quarter of this year. And homeowners age 62 and older

02:45held more than $14.5 trillion of that at the end of 2025. Jonathan, what is the business signal in

02:53those numbers? The business signal is that the mortgage opportunity extends well beyond the next

02:59purchase. A huge amount of household wealth sits at homes, and a substantial share belongs to people

03:06entering or living through retirement. For many of those homeowners, the question has changed.

03:11The first part of homeownership was about buying and building equity. Later, the question may be

03:17whether that equity should support a safer home, health care, family needs, debt management,

03:24or more monthly flexibility. At Finance of America, we see that as a life cycle conversation.

03:30The home may be the client's largest asset, but the market relationship often goes quiet after that

03:36first lien becomes seasoned. So lenders can remain relevant by helping homeowners compare their housing

03:42wealth and how that fits alongside their savings and other investments. Those figures did not mean

03:48every dollar should be borrowed. They mean that the market is large enough that later life equity

03:54planning belongs in mainstream mortgage banking. It really does. And it's good news, right? It's good

04:00news for all those homeowners who maybe have an opportunity now that people in the past did not have.

04:05And it's great for lenders to understand that opportunity. Scott, what should the industry be

04:10careful not to infer from these numbers? Well, I wouldn't encourage the industry just to look at the

04:16whole number of available equity. I think that it's more along the lines of, you've got a number of

04:24people who are aging into retirement every day. And I always think a reverse mortgage should be looked

04:29at from a couple of different ways. If you have a number of borrowers, 10,000 or more growing into

04:37retirement every day, who are looking for ways to stay in their home. And that number is in more

04:44business than anybody could ever imagine. I would look at it from the standpoint when you deal with

04:49the other mortgage companies around your state or your community, the financial planners, the CPAs,

04:54the home health care professionals. There are millions of borrowers out there that want to stay

05:01in their home and utilize a reverse mortgage to stay in their home. In some cases, it might be a

05:07home

05:07equity loan. In some cases, they might be better off selling their home. But I don't like the idea of

05:12just this. There's all this pent up home equity demand. There's all this home equity there. Because

05:17while that's true, I think you almost miss what the average American is looking to age into America.

05:24And what can I do to access my own home equity, stay in my home, to take care of my

05:30family,

05:31and look at it from that way? I'm not a big fan of just the sheer pie of home equity.

05:37I look at it

05:38for the amount of people that their lives would be better if they took out a reverse mortgage. It's got

05:43nothing to do with what interest rates are or what people may be looking at from a future purchase

05:48money or a refinance. But it's a different borrower. These are not 40-year-old borrowers

05:54buying their second home. These are people that are looking for different ways to access their own

05:59home equity to maintain or enhance their lifestyle. Jonathan, you described this just a minute ago as

06:06like a life cycle opportunity. So how do you explain the part of the homeowner relationship that many

06:12lenders may be overlooking to what Scott just said that like, this isn't your 40-year-old

06:18homeowner. This isn't your first-time homeowner. This is somebody who's maybe got a different set

06:22of circumstances. So how do you describe that? I like to use the phrase missing half the pie to

06:28make this point. The mortgage industry is really good at the first half of home ownership, helping people

06:34buy, move, refinance, build equity. But then that homeowner may spend 20, 30, 40 years in that home

06:42building the equity. And the relationship often fades when their financial priorities begin to change.

06:48So the second half of the pie is about helping homeowners evaluate what they've built. And that

06:54conversation could lead to a HELOC, a traditional second mortgage, cash out refinance, possibly a reverse

07:00mortgage, or maybe not getting a loan at all. I think Scott did a great job explaining that it's

07:07not just one size fits all. And the right answer really depends on each homeowner's goals and

07:12circumstances. So the point here is that growth does not always require finding the right customer.

07:19It could come from continuing to surpass customers. And that person's needs evolve as time goes on.

07:27So for lenders, that means thinking about the full relationship and not just thinking by one

07:35transaction at a time. Another example that I always like to bring up is Netflix. Netflix built

07:41their business on DVDs by mail, but eventually realizing that to continue to grow, it needed to

07:48move beyond a product that made them successful. So now Netflix is totally focused on streaming. And just

07:55about I think everyone has a subscription. And they haven't mailed a DVD since 2023. So lenders

08:02should be willing to think the same about how they serve homeowners over the course of their lives.

08:07I think this is such a great point. And I feel like this is what the whole industry is looking

08:12at.

08:12You know, if you're just like an order taker, if you're just like here, you know, a transaction thing,

08:17that's not what any home buyer or homeowner wants. But especially in this category, I think that

08:23the idea that you're approaching it as somebody who's looking at the whole picture and they now

08:28we now have a range of things we can do for people. And I love that both of you are

08:32like,

08:32you know, let's talk to the person. So along that line, when an older homeowner wants to access

08:38equity, where should the conversation begin? And how should a mortgage professional help that person

08:43evaluate all of the available options? And Jonathan, I'll ask you first.

08:47That conversation really has to begin with what the homeowner wants to accomplish and what they

08:53want to protect, right? How much do they need? Is it a one-time need? Is it something that's

08:59ongoing? How important is preserving that first mortgage? What monthly payments they're comfortable

09:05carrying? How long do they plan on being in that home? From there, the loan officer can then

09:11evaluate the options, cash out refinance to possibly consolidate borrowing. But it reprices the entire

09:21first mortgage balance. A HELOC or a traditional second can preserve that first lien, but that's

09:27going to add a monthly payment. So, you know, another great option for eligible homeowners, 55 plus,

09:33a reverse mortgage may be that right product for them. A proprietary second, such as our home safe

09:40second, may allow homeowners to keep their existing first and give them that equity that they need

09:46without requiring that additional principal and interest payment. So, I mean, I think really the

09:52goal is for that loan officer to be able to explain those trade-offs enough so that every homeowner is

09:59able to make an informed decision around the loan product that's right for them.

10:05Scott, how has that changed since you've been in the business? Like, or how has that changed over the

10:09last five years? Like, do we have more options now? What does this look like?

10:13Well, there's certainly always options out there. I don't really think the core idea of a reverse

10:19mortgage has changed in the last 25 years. I'd really go back to my original thought. It's expensive

10:25to grow old in America. And if I were in the mortgage business or the credit union business,

10:31I would look at it as just another arrow in your quiver. You've got a first-time homebuyer,

10:37you've got a second-time homebuyer, a third-time homebuyer, home equity lending. A reverse

10:42mortgage is very much a customized home equity loan because it fits everybody differently.

10:48Some borrowers are looking for strictly home health care issues. Some borrowers are looking

10:52to eliminate their first lien payment. And so, I think when you start looking at what would a

10:59underwriter miss or what would a loan officer go after, I think the question is, what are you trying

11:04to get accomplished? I mean, sometimes it might be as simple as, I'd like to alleviate my traditional

11:09first lien mortgage payment. That's a good one. Some people may want to make sure I do some home

11:16improvements. Some people may need it for nursing care. So, there are so many different aspects

11:21that it's imperative to really have a conversation of, what are we trying to get accomplished here?

11:26And I think sometimes people miss the idea, well, it's just like a home equity loan.

11:31Well, in the simplest fashion, it is just like a home equity loan. But the deeper fashion is,

11:36this is a different borrower and should be perceived as a different borrower because their

11:41needs are going to be different. And I think that when you can figure out the idea of this is

11:47a unique

11:48home equity loan, which is a deferred payment home equity loan, I think some people in the mortgage

11:52side kind of get lost in the left field when they hear reverse mortgages. When ironically, a reverse

11:58mortgage is one of the simplest products out there. And ironically, it also has some of the most

12:04significant consumer protections out there. So, I always look at it from the lens of, you've got all

12:10this home equity out there, trillions of dollars, and then you narrow it to these seniors who are aging

12:15into America, aging into retirement, but they're also doing it from different perspectives. A 62-year-old

12:22borrower is different than a 92-year-old borrower. What's in their best interest? Maybe their best

12:27interest is selling their home and moving in with their children. That may not be the answer you

12:33want, but others more often than not want to stay in their home, access their home equity. A reverse

12:40mortgage can be a fascinating tool. And I think that's a little more of a narrow strip than people

12:47realize, but that narrow strip is millions of homeowners. So, it's really, it may be narrow,

12:54but it's still pretty wide. You know, one of the things that, and you mentioned like a 61-year-old

13:00or a 65-year-old versus a 95-year-old, right? One of the things that can be really different

13:04is

13:04income. So, you know, when lenders are looking at these different borrowers, where do you think

13:10traditional underwriting maybe falls short because these, you know, income changes and how should

13:16lenders think about the gap? I'll let Jonathan take that one. You know, it's interesting. As people

13:22enter into retirement, oftentimes your income does go down. So, I think this is where traditional

13:30financing sort of cuts off. And here's where reverse mortgages kind of help to pick up

13:36and really help serve these customers as they enter into retirement.

13:41Can I may just add one little comment? Because I think that sometimes people get

13:45lost in the shuffle of what a reverse mortgage is. There are about four different borrowers that go

13:51from the borrowers who are extremely wealthy, have a lot of assets, and they're looking at a reverse

13:56mortgage from a perspective of maintaining their assets and building them. And that can go all the

14:01way down to everything's relative. Everybody's got a health issue that's either here or coming here.

14:08Somebody has fallen. They've hurt a hip. All the way down to the borrowers that really need the home

14:13equity to maintain their lifestyle. And so, when you start going through the life cycle of a reverse

14:18mortgage, regardless of your age, I think sometimes that kind of gets missed. I think it really goes

14:24back to there is a significant need in the United States for people to be able to access their home

14:30equity, which, by the way, is in many cases, their number one asset and their number one resource.

14:36How do you utilize that to put yourself in a position where you and your family are protected

14:42financially? You've got a roof over your head. And I think sometimes that idea of what a reverse

14:47mortgage is, is missed. And to me, a reverse mortgage, depending on what you're trying to

14:52get accomplished, if you can take care of your financial house and your physical house,

14:58that alleviates a lot of problems. And so, if you're dealing with somebody's wife or somebody's

15:04grandparents or somebody's great-grandparents, it's all over the map. Everybody's got a different

15:10need. And so, I think the underwriters or the mortgage companies that are looking to get into the

15:15reverse mortgage business or are in the reverse mortgage business should look at it from a

15:20standpoint of it's not just a single strip of a borrower. It's multiple different borrowers.

15:26I really love that, your focus on personalization and getting to know what that person needs and

15:32then evaluating. Because it's, I mean, it's such a giant group of people. It would be foolish to just

15:38try to paint them with the same brush, right? Like they are all coming from different parts, just no

15:44matter what their age is. And we all say seniors, even that's not accurate, right? There's lots of

15:48in there, but then their individual financial situation. And so, let's move from strategy to

15:54execution, right? So, for a lender that wants to serve older homeowners and their equity needs more

15:59effectively, what should happen in the next 90 days? And Jonathan, I'm going to go to you first.

16:05I would start with a borrower scenario audit, right? Get sales and ops together and review cases the

16:12company could not solve. The homeowners with strong equity that couldn't meet the traditional debt

16:18to income requirements, borrowers were rejected for cash out refinances because of their first mortgage

16:23rate, or people who needed funds could not support another required monthly payment. We actually just

16:29did this on a call earlier this week with a partner out in Hawaii, and it was amazing. It was

16:35a $2 million

16:36home. The borrower had only owed $650,000, and they did not have a product that could serve that

16:43customer. We showed them how our home safe product was not only able to extinguish the $650,000, the

16:49borrower got another $200,000 in cash, which was really what they were looking for. So, I think it's

16:55really important for every loan officer to know that you don't need to become an expert, but you definitely

17:01need to be able to recognize when the reverse mortgage opportunity exists. And then, really,

17:08that's kind of where we could come in and help be that specialist to kind of add and guide you

17:14through

17:14those conversations. We also have another option called reverse match that a lot of companies have

17:20opted for. It's really a reverse eligibility match, I should say. No PII provided, but we can simply look at

17:28your database and tell you of all your customers, past customers, in-servicing, whatever it may be,

17:35prospects. We can show you who qualifies for which products, so you could kind of go out and be a

17:41lot

17:41more targeted in some of these conversations and really know what each customer is eligible for.

17:49Love it. Scott, what do you say?

17:51Well, I always am kind of proud at how many reverse mortgage companies are a part of the Texas

17:57Mortgage Bankers Association and how many loan officers call us on a pretty regular basis.

18:02I'm looking to get into the business. I always tell people, look, if somebody's great with a

18:08first-time homebuyer, they may not be great with a 70-year-old retiree. And so, let's make sure you

18:15understand the skill set of your originators and your managers. I've always been a big believer

18:22back when I was in the business that you kind of have a hub-and-spoke routine. Every time somebody

18:27gets a reverse mortgage lead, send it into one centralized unit or one centralized person,

18:33and then let that person turn back around and hand it back out. Because some loan officers are great.

18:38They're closing 15, 20 loans a month. They're simply not going to have time to necessarily learn

18:44a new product. But I'm a big believer in making sure that you really have kind of almost like a

18:50centralized reverse mortgage company or kind of SWAT team within your SWAT team that really understand

18:57what a reverse mortgage is versus what it is not. And those are really two separate things.

19:02And I think that really gives you an opportunity to really take care of the borrowers. And like I said,

19:08there are multiple different borrowers with multiple different needs. And so, we need to make sure

19:13that we're not treating a 62-year-old couple that are looking to take care of their assets the same

19:20way we would look at an 80-year-old borrower who are really trying to find a way to get

19:24closer to

19:24medical care or their children or their grandchildren. So, I think anything you can do to kind of hub and

19:29spoke it, I've always felt that works best because I think it's somewhat unrealistic to say every loan

19:37officer in the United States is going to be really primed and ready to go on selling a reverse

19:43mortgage because I just don't think that is accurate. Just like somebody that's a great

19:47reverse mortgage originator would do great with a first-time homebuyer or a second-time homebuyer.

19:53I think it's as much of a personality thing and a skill set as anything else.

19:59I really love these practical tips because you guys are doing this every day. You know what it takes.

20:04And so, understanding what that person might need and then maybe handing them off to an expert at

20:10your company is the way to go, right? But at least at that front end, knowing here's some options

20:17so that you recognize it and you don't just like, oh, we can't help that person.

20:22Yeah. So, look, I was in the reverse mortgage business for 25 years and ended up my career

20:29more on the kind of the policy, the government relations side. But I would say when you talk

20:34about a reverse mortgage, the most important thing is that it is a customized home equity loan

20:39and that it should be perceived as a great opportunity for somebody to look into their

20:46existing servicing portfolio, their existing clients, because over time, all of us at some point

20:54should at least be looking at the options associated with a reverse mortgage. It may not work for

20:59everybody. And I don't think anybody in the reverse space says it works for everybody, but it should

21:04be something that every conversation, every family has a conversation. You've got Thanksgiving coming up,

21:09you've got Hanukkah, you've got Christmas coming up in the next few months. Those are when a lot of

21:13these real conversations, these difficult conversations can take place with mom and dad or Mimi and Papa.

21:18And when everybody gets their arms around the opportunity that a reverse mortgage gives you,

21:27once you get over that hump, then I think a reverse mortgage becomes a very easy product to sell

21:32because I think that you really can protect homeowners and their families against the downside

21:39of what happens if mom falls and breaks her hip. It's not a conversation everybody wants,

21:44but I'll say it again. It's expensive to grow old in America and it can be lonely and it can

21:49be scary.

21:50And a reverse mortgage should not be perceived as something that is difficult or cumbersome,

21:55but it should be perceived as an opportunity to enhance my mortgage company's existing book of

22:00business. It's such an important conversation. Thank you guys so much. Before we go, a quick

22:07programming note to our audience. Jonathan and Scott will both be at the Housing Wire Mortgage Banking

22:11Summit on October 1st here in Dallas. And they're going to have an expanded conversation on how the

22:16mortgage industry is changing and where lenders can find new opportunities for growth. They'll explore

22:22how shifting market conditions, technology, changing borrower demographics, all of these things are

22:27reshaping the industry. And the discussion will look at where the data supports changing your approach

22:33to generate more funded loans today and position your business for the future. So I'm excited about that.

22:40I really appreciate you guys coming on today. This is always a conversation I'm very interested in

22:45and our audiences too. So thank you so much.

Where senior homeowners fit in the lending lifecycle

Category

Transcript

Comments

Recommended