Excerpt from article:

We all know the scenario: Pretty soon a flood of baby boomers with shrunken 401(k) accounts are going to pull equity out of their homes to give themselves some retirement income. How? With reverse mortgages.

While the RM sector is expected to continue growing and RM technology keeps improving, reverse lending has long been a cottage industry with its own technology. Loan origination systems serving the niche incorporate the Fannie Mae form 1009 loan application rather than the 1003 used for forward lending, and the home appraisal carries more weight than the creditworthiness of the applicant. Financial counseling plays a much larger role in reverse lending. Origination cycle times usually are much longer than those on the forward side. In today's market, the compliance issue for reverse lending requires attention.

A big issue for reverse lending technology is whether it should be designed to serve the RM niche or to blend reverse lending into a mix of forward-lending products. Some LOS providers like Mortgage Cadence argue the latter.

Certainly, as the RM sector grows, we can expect the bigger players to redefine it to fit their broader objectives. When insurance giants like Genworth and Metlife assimilate their reverse lending acquisitions to enter the arena, they have to be thinking of making reverse mortgages one in a suite of financial products they can offer, despite being hampered by regulatory scrutiny and a $6,000 cap on HECM origination fees. Similarly, large lenders will want reverse as another arrow in a full quiver of products.

Colorado-based Mortgage Cadence is not likely to be the only LOS provider believing it can enable lenders to use its software development kit to build systems for themselves that seamlessly move back and forth between forward and reverse lending via a robust decisioning engine. MC boasts that its ACE Rules Engine was built from the ground up to automate the lending process, without being imprisoned in either 1003 or 1009 workflow, delivering compliant documents for forward or reverse virtually at the flip of a switch. "The business logic was built first," stated MC vice president Brad Thompson, who oversees Mortgage Cadence's Finale division. "When we moved into the reverse space, it didn't require a retrofit. What we did was add the screen components to support the 1009 instead of the 1003. We are the only platform out there that allows you to do that."

"At the time that Genworth selected the Mortgage Cadence solutions, Mortgage Cadence was one of the few providers who offered an enterprise-class lending solution for reverse mortgage loans," said John Goode, CIO of Genworth Financial Home Equity Access (formerly Liberty Reverse Mortgage).

He said Genworth uses the Mortgage Cadence Orchestrator platform for most of the origination cycle, "including processing, underwriting, and closing, as well as Mortgage Cadence Finale for the generation of documents." Orchestrator is their system of record. "The ACE Rules Engine allows us to quickly add new business rules to the application without writing complex code, and the APIs allow us to integrate Mortgage Cadence Orchestrator with other mission-critical applications," he explained.