TAMPA, Fla. — Aiming to get in on the ground floor within the credit union industry, MEMBERS Trust Company is gearing up to roll out its own reverse mortgage program.
The Office of Thrift Supervision has given MEMBERS Trust the green light for the new venture. With this approval, the trust company will establish the Reverse Mortgage Center to provide a solution for credit unions to originate and service the Federal Housing Administration's Home Equity Conversion Mortgage, as well as a newly created proprietary product, the "Reverse Equity Mortgage…Payment Freedom for Seniors." The center is scheduled to debut in December.
"Most credit unions want to exercise control over pricing and servicing with its products and not just make product referrals to outside entities," said Tom Walker, president/CEO of MEMBERS Trust. "Our Reverse Mortgage Center will function as if it was a department of the credit union providing all product, program design, underwriting, documentation, and servicing support needed for a successful reverse mortgage offering."
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Walker said he has been involved with reverse mortgages since 1987. At that time, as COO of $5.8 billion Suncoast Schools FCU, Walker closed what was considered the first line of credit reverse mortgage in the country by a private sector lender. Suncoast has been offering proprietary reverse mortgages since for twenty years.
It is estimated that 110,000 reverse mortgages will be closed in 2007, a 40% increase over 2006, according to MEMBERS Trust. Since the FHA introduced its Home Equity Conversion Mortgage in 1989, the reverse mortgage market has matured significantly with developments such as securitization in the secondary market, Ginnie Mae's Home Equity Conversion Mortgage Backed Securities Program, and the purchase by Bank of America of Seattle Mortgage, the third largest originator in the country, MEMBERS Trust said.
The demand is being fueled by the country's aging population, shortfalls in retirement savings for many Baby Boomers, increased need for long term care prevalent with increased longevity, and the sharp increase in home appreciation, which converts the home to the primary asset of the household.
One key driver behind MEMBERS Trust's decision to enter the reverse Mortgage arena is its belief that "they should be more than just a loan product sold in a vacuum to generate a broker commission." MEMBERS Trust suggested that the product should be a planning tool presented as part of an overall financial plan to achieve retirement and estate planning goals.
By providing product leadership with the proprietary Reverse Equity Mortgage Payment Freedom for Seniors product in combination with a comprehensive financial planning strategy, MEMBERS Trust said it believes the new Reverse Mortgage Center and its partners will improve the product's value proposition by lowering their overall cost for seniors.
MEMBERS Trust said it was approached in early 2006 by MEMBERS Development Company, LLC, a consortium of 62 credit unions, and CUNA Mutual both dedicated to the development of high value member products and services, after a survey from their membership indicated a strong strategic interest in reverse mortgages.
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