With volume falling about 20% last year and another 20% this year if all the projections end up being true, lenders need new loan products to reach out to new market if they're going to survive. Given the credit crunch and subprime issues, though, the mortgage market has returned to a very vanilla, conventional environment.

One virtually untapped segment of mortgage lending is reverse mortgages. However, given that this loan product amounts to under 1% of the total industry, not many lenders even know what's required to get a reverse mortgage done. That's where technology comes in.

In total, 77% of 13 respondents believe new technology is required for lenders to enter this space. But can investing in new technology in a down market where margins are tight as it is really help lenders get through this downturn?

The short answer is: Yes, noted A.W. Pickel III, president of LeaderOne Financial. Lenders need technology to tap new markets like reverse mortgages. Reverse mortgages are a great product for our seniors but due to the demanding calculations required to determine the actual loan amount, a software program is absolutely essential for the loan consultant to work his or her senior clients.

Handling a reverse is about listening to the client, answering their questions, and using technology to determine the best loan. Determining loan amount on a calculator simply cannot be done by a loan consultant. It requires the use of actuarial tables with the knowledge of all the reverse mortgage products out there.

But does doing reverse mortgages require a specialized system? We're not talking theory, because we've done reverse mortgages through our system, answered Michael Hammond, chief marketing officer at origination vendor Mortgage Cadence. The workflow on a reverse mortgage is different when compared to a conventional mortgage. For example, there's a lot of borrower counseling required, going to the right investors, increased attention to the property valuation, etc.

Counseling has to be approved by a HUD official and nothing can proceed without the counseling. Traditionally the lock goes for 120 days from the time the case number has be filed. These are all reverse mortgage nuances. The underwriting is different because they're collateralized based heavily on the value of the property. Instead of looking at the borrower's credit, looking for liens and hazards associated with the property is more significant in this space.
Underwriting now also has to consider repairs that the property may need, and close to 30% of these properties need repairs, said Mr. Hammond. Then there's different servicing obligations to be aware of as well. So, you really need an expert to guide you through this if it's new to you as a lender.

Generally speaking, technology has played an important role in the growth rate of homeownership in this country, pointed out Steve Probst, the national sales manager for Fairway Independent Mortgage Corp. Our industry can share important information with the consumer more efficiently then ever before. Major industry software companies are providing powerful illustrative models that can help loan officers quickly determine a suitable mortgage solution for most borrowers.

The speed and efficiency of delivering mortgage services to the general public will continue to improve as we embrace the utilization of powerful technological tools. 2008 will be a pivotal year for companies who have lagged in the pursuit of helpful technology. The lack of technological impetus can hurt efficiencies, increase costs in transacting business and ultimately put you out of business.