As the leader in the reverse mortgage industry, number one lender American Advisors Group (AAG) is often seen as a standard bearer for the entire business due to its reach and ubiquity in the space. among the audience.
To get a sense of the terrain from the industry leader’s perspective, RMD spoke with AAG President Ed Robinson and Senior Vice President of Wholesale Kimberly Smith at the regional meeting of the West of the National Reverse Mortgage Lenders Association (NRMLA) in Irvine, California.
Both Robinson and Smith discussed the growth of the wholesaling business, the need to further broaden the base of older homeowners who can be served by the reverse mortgage industry in light of new economic challenges, the reduction in volume and a new focus on improving the customer experience.
“Inflection Point” Reverse Mortgage
The rapidly changing environment for reverse mortgages has put stress on how AAG does business, Robinson said.
“I would say we’re at an inflection point not just in our business, but in the industry as a whole,” he says. “One, with what’s happening with interest rates and the term mortgage market, you’re seeing a bit of an ebb and flow in both at the same time, particularly in the retail sector. So, there is an element of higher interest rates causing people to lean less into term mortgages, and therefore some of the refinances you would have seen shift more towards reverse mortgages.
However, the reality of higher interest rates also means that borrowers are unable to see the amount of loan proceeds they were able to obtain previously, which has helped to underscore the need for AAG to remain nimble. , adds Robinson. However, they are seeing increased activity on the wholesale side.
“We’ve seen really good momentum in the wholesale business, I know Kim in particular has seen a nice increase in volume, even as we reposition ourselves more broadly in the wholesale market,” Robinson said. . “It’s been very supportive.”
Part of the uptick in wholesale volume, Smith says, comes from inflation and new economic uncertainty.
“We’re at a point right now where this product is needed more than ever,” she said. “Inflation kills people, especially anyone on a fixed income.”
Improving the customer experience at AAG
In a previous interview Robinson had with RMD, he talked about a major priority for 2022 centered around improving the customer experience. When asked how this initiative is progressing, Robinson said new insights will help improve existing customer processes.
“We enlisted an industry expert in customer experience, journey mapping and marketing to help us map the entire customer journey, literally,” Robinson said. “As we continue to update our processes and technology, we plan to leverage this new information so that we can truly modernize these attributes to meet customer experience needs. At this point, we are in the project for a few months and have already identified several sticking points that we are actively seeking to eliminate.”
The project also identified new opportunities to streamline processes aimed at improving adoption rates and building consumer “desire” for engagement with AAG and its product offerings, Robinson added.
“The first results are good,” he said. “We’ve also done some recent surveys with our own customers who are in the pipeline as we speak, and got some really good feedback that either backs up or disproves some of our assumptions. We then take that work and apply it to this customer experience/journey mapping exercise as well.
Smith added that these initiatives also ring true for the company’s broker/lender customers in addition to borrowing customers, and pain points on the wholesale side are also being identified and addressed.
“We do the same work with our wholesale customers: surveys, interviews, looking for weaknesses and opportunities to improve,” she said. “So this will not only impact the customer journey and help our wholesale customers’ borrowers, but we’re also looking through the lens of B2B relationships. I’m really excited about the early results.
Decrease in refi volume, wholesale activity of AAG
While remaining at historically high levels, activity in the reverse mortgage industry nonetheless saw a decline in May, following an earlier reduction in volume in April. Robinson noted that the reduction in volume seen industry-wide has affected AAG’s retail and wholesale channels, but also describes this reality as a learning experience for the company and the company. industry.
“We’re certainly seeing a significant reduction in our retail side of the house as well as some sort of reduction in our wholesale side,” he said. “It would indicate that the industry more broadly is seeing refi reductions. The only thing I will say is that it made us ask ourselves both from a business and industry perspective, what are we doing to really make the pie bigger? I love being able to help consumers get access to more cash, regardless of whether they are an existing borrower or a new borrower.”
At the same time, the industry’s refocus on “widening the pie” of the addressable market and increasing penetration among older homeowners is a by-product that could come from a lesser focus on transactions. HECM refinancing to HECM.
“At this point, we need to help more consumers so they can fight inflation, who can fight rising interest rates, etc. We can make sure they have another arrow in their quiver. to be able to use it, and that’s how we make sure that happens.
Yet, if refis offer a tangible benefit to a borrower, they will not be denied. But paying greater attention to changing economic dynamics is essential, he says. Smith adds that as rates increase, the wholesaler side of AAG has seen an increase in incoming inquiries due to less futures activity, which has necessitated making up for lost refi business.
“We don’t need to call [those partners] right now,” she said. “They call us because they have this void in their business that they need to fill. They see the need and the opportunity. It’s a direct correlation: rates go up, then the wholesale phones start ringing. »
This interview with Robinson and Smith was conducted before the announcement of a downsizing at AAG last week. As HousingWire editor James Kleimann and mortgage journalist Flávia Furlan Nunes reported, the company confirmed that layoffs had taken place, but did not provide additional details or the number of employees affected.
“AAG asks its business unit managers to continuously assess the overall costs and staffing needs of their department. After analyzing market trends, AAG has made some organizational changes,” an AAG Holding spokesperson wrote to RMD and its sister publication HousingWire. “We regret any negative impact the organizational changes have on AAG employees and their families.”
Recent layoff activity in the reverse mortgage space has not been isolated to AAG, as multi-channel lender Open Mortgage has confirmed that 14 employees have been laid off as part of a reduction in force (RIF) affecting that company’s mortgage term operations team on the heels of the exit of its president. Layoff activity in the term mortgage sector has also accelerated recently with big changes in the rate environment and a sharp reduction in demand, as reported recently in sister publication RMD RealTrends.
Look for more Robinson and Smith on RMD soon.