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April 9, 2024

When a Business is Just a Product

Reverse mortgage lending has evolved into a product offering, enabling lenders to better address the needs of a broader range of borrowers.

A clever entrepreneur can build a business out of any good product. But the most successful business people know when it makes more sense to think of a new offering as a simple product instead of going to the trouble of building an entire business around it.

Launching another business involves going back to the drawing board and setting up every aspect that it takes to operate competitively in the market. This can be incredibly expensive and time consuming. By changing your thinking and process, you can save a lot of time and trouble.

We have a perfect example of this in the mortgage industry. For years, reverse mortgage lenders had no choice but to set up an entirely new business to offer these products. Forward loan origination systems were not configured to originate these deals, nor was all the compliance information built into the systems.

Those days are over and it’s opening up significant opportunities for both forward and reverse mortgage lenders.

A new way of looking at reverse mortgages

An intriguing shift is occurring in the world of reverse mortgages - major lenders are adopting the product, dispelling old notions that offering reverse mortgages requires an entirely separate line of business.

The latest originations leaderboard reveals just how enthusiastically forward mortgage lenders now integrate reverse lending.

Top  lenders offering traditional home loans now also rank among the top reverse mortgage originators. Their rapid rise up the boards signals that a strategic change about offering a reverse mortgage as aproduct has taken hold after years of work socializing the idea.

Interestingly, the flip side is also true because the right technology platform is allowing these early players in the reverse space to expand their product offerings into the forward mortgage market thanks to the ability to originate both forward and reverse mortgage loans on the same platform

Why everything is changing for reverse mortgage lending

In the past, lenders often viewed reverse mortgages as necessitating a distinct business unit given their complexity. The assumption was that the origination and servicing of these unique products demanded specialized teams, customized processes, and proprietary technology platforms.

While this was true in the past, the success of these non-reverse lenders in quickly capturing significant reverse lending shares debunks that theory today. It demonstrates that incorporating reverse mortgages as one more product offering within broader forward mortgage operations carries major advantages.

How are they doing it? With the Mortgage Cadence MCP loan origination system, an LOS that can originate both forward and reverse mortgage loans on the same platform across multiple channels

Now, reverse loans can have their own workflows on the same infrastructure and tech stack that supports traditional lending. Compliance and secondary market expertise are built into Mortgage Cadence so there is no longer the need to maintain multiple systems just to expand products.

Reverse mortgage lending is no longer just a business. It’s a product offering. An offering that allows lenders to respond to more borrowers’ needs.

The financial benefits become obvious - lower overhead without extensive duplicate resources and maximum scalability. As one more mainstream offering, reverse lending gets specialized attention from internal experts while leveraging the broader mortgage organization.

Expect more familiar mortgage names to continue pushing up the reverse lending ranks as others follow this strategic trend. And, watch for reverse mortgage lenders to begin offering more traditional loan products. MCP provides the perfect foundation. If you’re not offering a full range of mortgage options for your borrowers because your current technologies are holding you back, reach out to Mortgage Cadence today.

By George Morales, National Sales Director at Mortgage Cadence 

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Media Contacts

Mortgage Cadence: 
Alison Flaig 
VP, Marketing 
(919) 906-9738