HighTechLending’s Paul Fiore on serving senior homeowners: ‘Be holistic in your approach’

HighTechLending (HTL) continues to be a key player in the reverse mortgage market as evidenced by its top 10 ranking for Home Equity Conversion Mortgage (HECM) endorsements. But the California-based lender does much more than that.

In the home equity lending space, HTL has sought to distinguish itself through a diverse product set that includes federally insured and proprietary reverse mortgages. And its EquitySelect products, which differ from traditional reverse mortgages while retaining some of the benefits, underwent a recent refresh through higher loan-to-value (LTV) ratios and expanded age limits.

Paul Fiore, the company’s vice president of sales and branch production, recently spoke with HousingWire’s Reverse Mortgage Daily (RMD) about HTL’s ongoing initiatives to serve senior homeowners. He touched on the importance of alternative products with payment flexibility, tech integrations for creating a better origination process and why loan officers shouldn’t be overly concerned about high interest rates.

Editor’s note: This interview has been edited for length and clarity.

Neil Pierson: Let’s start with a progress report on how things have been going with branch development, recruiting and product changes since you joined HTL earlier this year.

Paul Fiore: I’ve been here now a little over six months, and the recruiting and the branch stuff been going really well. I’ve gotten very broad organizationally, so they have me involved heavily now in EquitySelect, helping create awareness and grow distribution with our broker partners.

We’ve revamped a lot of what we were doing to create awareness. In our webinars that we do now every week, we’re trying to show product examples where this fits for the demographic that we’re trying to serve. I think people were misinterpreting where the product fit, and so we’ve really aligned better on how EquitySelect first lien is good for this type of borrower — the 50-plus demographic that are currently transacting on HELOCs or cash-out refinances and choosing not to do reverse mortgages.

It’s just the reality. There’s a million-plus consumers 55-plus transacting in mortgages, and only a small percentage of those people are doing reverses. The vast majority are choosing HELOCs and cash-out refinances. EquitySelect first lien really is meant for that borrower. And then the second-lien product is broader because you can go down to a monthly payment plan of 5% of the annualized loan balance.

Pierson: It seems like some people working in the reverse mortgage space haven’t considered this type of outside-the-box approach. Is that a big part of the conversations you’re having with brokers today?

Fiore: It depends on the broker partner. We talk to one side that does reverse mortgages and to the traditional forward side that doesn’t really do reverse. And then there’s the group in between that does everything.

The clarity for me in messaging is, if you’re only offering reverse mortgages — and I certainly did that for a long time in my career — you have to accept the fact that you’re only going to convert a certain percentage of people. Alternatively, you open up your product suite and offer this product side by side with reverse. I wouldn’t call it a reverse mortgage fallout product. Does your client want a product with payment options, or do they want a product without payment options? Here’s both, here’s how they work and here’s benefits of each.

If you’re only doing reverse, those borrowers are going to go elsewhere. And a lot of people who do forward loans, sometimes they just don’t understand the 50-plus demographic or they don’t understand how to sell to them. Oftentimes, they’re getting sold HELOCs or cash-out refis, and they don’t realize they have other options. They avoid reverse.

Now, you hear about this product that was literally built with the intent of filling that gap. When you’re talking to somebody who’s 52, 53 years old, and they’re contemplating what the next chapter looks like, they want payment flexibility, right? If you put them in a HELOC, that debt-to-income (DTI) ratio might not get them the cash they want. And they’re also going to have a payment recast after a certain point, which could put them in a bad spot when they’re entering retirement.

This is a nonrecourse. It has no payment shock, no payment recast, and it’s a 40-year term. When you’re looking at the options that someone has, be holistic in your approach, because this product is now satisfying and filling a gap that the traditional lending products wouldn’t have done otherwise.

Pierson: Let’s talk about technology. There have been some recent platform expansions to include proprietary reverse mortgages. Are there any hurdles in explaining product options to borrowers or showing LOs how they’ll be compensated that tech is helping to address?

Fiore: I’ve sat through some demos, and some of those tools are very interesting. We’re having conversations with those providers. I won’t go into too many details, but we are talking to them about how EquitySelect fits, because it’s a forward-based product, so it’s driven with a 1003 and not a 1009. Because of these calculators being proprietary and unique, how does EquitySelect fit within those systems?

For us, what we’ve tried to do is create a broker portal. When you’re signed up with us, you get your logins, you can go in there and there’s a full calculator. You run your scenarios. It’s detailed to the point where we’re running DTI calculations for someone. We’re showing the broker the various revenue opportunities they have based on the payment plan that’s chosen.

We’ll go into the details, show amortization schedules, all of that within our broker portal. Then you can work and build your submission through a connection that will lead into Encompass — we basically originate into Encompass right now.

People can upload a file through Encompass TPO Connect and it just reaches through to our system. Are we looking at future iterations of that to create an even more seamless approach to originating? Of course. Technology keeps advancing, and there’s a lot of ways that you can really create some very cool tools that keep the broker front and center through simplicity.

I think some of these tools are really cool and awesome, but sometimes the UX isn’t as friendly as it can be. Some of the ones that have been really successful — and you can think about multiple HELOC companies that have grown exponentially in size — they’ve gotten really good at building those types of tools. Those are the things we’re focused on right now as we’re looking to go to the next level.

But we’re also looking at how we can serve the broad market, like the reverse mortgage people who are used to using QuantumReverse. The forward mortgage companies, many of them are on Encompass, so it’s about servicing them in a way that can make uploading and originating their file simple. But it’s an ever-evolving market and it moves super fast right now. You just want to make sure that what you choose to do truly services your client the right way.

The issue is that point of sale systems aren’t great in general. So anything you can do that solves that and then integrates within the back-end LOS, you’re doing something that truly solves a major need and becomes scalable, which is really the important part.

Pierson: Let’s shift gears and talk about reverse for purchase programs. Is that a market HTL is active in?

Fiore: We’re full service, so we have a proprietary purchase loan. I think, in general, the industry has kind of acknowledged that the proprietary reverse product has become the dominant product over HECMs. Everybody I talk to, they’re doing more prop loans than HECMs these days.

It’s one of those things we’ve been talking about for years: How do you tap into the purchase market? I think there’s been some headway there, and I know we’re trying like anybody else. We’ve been making a big focus with EquitySelect, because it can also be used for a purchase. In California and Florida, and multiple other states, we now offer it as a purchase option.

I will say that when you’re talking to Realtor partners, understanding a deferred interest product with a payment is sometimes a little easier to overcome than educating them on proprietary reverse for purchase. So we are leaning into EquitySelect on that front, but we’re not turning our back on other opportunities.

You can go pretty high on LTVs compared to a HECM, but the amount of money you can qualify for is also significant on the LTV side versus what you might get with a proprietary reverse mortgage. It’s still nonrecourse and you still have nonborrowing spouse protections. You’ve got those reverse mortgage benefits but in a more traditional product.

Pierson: Higher interest rates are impacting all lenders, and they’re affecting reverse mortgages right now by eating into borrower’s proceeds. How do your conversations go with sales staff about pitching to rate-sensitive borrowers?

Fiore: I’ve always tried to avoid being an interest rate-driven [salesperson] in any products I’ve ever sold. To me, if you’re focusing solely on interest rate — not feature benefits and what the actual outcome is — there’s always going to be somebody who’s going to find a way to beat your rate by a little bit.

If you just think about 30-year fixed-rate mortgages, they’re in the mid-6s. With reverse mortgages, you look at where they are with the principal limits getting crushed because the floor is 3% and now you’re looking north of 6% on expected rates. People are turning to proprietary reverse mortgages for a reason, because they’re focusing on the right thing, which is borrower outcomes.

We’ve been hearing for the last year-plus now that interest rates are coming down — and here we are. Interest rates have spiked dramatically because of things that we can’t control. If you you focus only on interest rates, you wind up with a frozen market.

For me, it’s not about rates; it’s more about outcomes. How much cash is someone looking to get? What are they trying to accomplish for the next five, 10, 15 years? Is it a cash-flow situation or is it a payment flexibility need? The more you focus on outcomes, the less you get caught up in the interest rate. Interest rates matter mainly to me around affordability and qualification.