Finance of America (FOA), the leading reverse mortgage lender, presented a robust outlook last week in its third-quarter 2024 earnings and is aiming to hit the ground running with business in 2025.
While the reverse industry has faced unique headwinds over the past couple of years, the company is seeking to build on the momentum provided by its HomeSafe Second proprietary product. It also wants to widely deploy refreshed marketing strategies that are designed to both educate and appeal to older homeowners about the use of home equity in retirement.
FOA President Kristen Sieffert spoke about some of these efforts during a Q3 earnings call.
‘Digital innovation’ team being built
HomeSafe Second, a proprietary second-lien reverse mortgage product, has been a major focus for FOA and its partners this year. The product was first introduced in 2018, marking the industry’s first-ever second-lien reverse mortgage option. It was suspended in 2020 due to economic volatility caused by the COVID-19 pandemic, but it marked its return in February 2023 with a minimum-age eligibility reduction to 55.
The company also recently announced a refresh of the product, lowering the interest rate and adding four additional states to its service area for a total to 10 states.
On the earnings call, Sieffert discussed a new “digital innovation” team that is being built at FOA with the purpose of delivering “financial services to seniors in a way that is modern and user-friendly.” At the end of Q3 2024, the company launched a digital-first marketing campaign for HomeSafe Second specifically to identify the most effective strategies for attracting new customers, and a “dedicated team” is being built to further support these efforts.
“As the campaigns and team mature, insights gained will inform our growth strategy and investments for a digital-first channel next year and beyond,” Sieffert said.
Sieffert also revealed that the company has enlisted the services of a new advertising agency partner. In 2025, it will begin rolling out new regional and local programs designed to “build our brand profile and drive business in strategic markets,” she said.
Sieffert also mentioned the refreshed elements of HomeSafe Second, sharing information that looks to corroborate the statements of additional interest from customers.
“In the third quarter, we saw an 89% increase in HomeSafe Second loans compared to Q2, and we anticipate further growth as we invest more capital and resources in the product,” she said.
The potential for building on HomeSafe Second’s numbers also comes from broader trends in the home equity lending space, she said.
“While home equity lending nationwide is on the rise, recent data shows that people 55 and older face denial rates exceeding 35%,” she said. “Many in this demographic have considerable home equity but struggle with tighter credit conditions that impact qualifications. This represents a significant opportunity for us as our products are specifically designed to serve this demographic.”
With speculation around mortgage rates now turning to a higher-for-longer scenario, Sieffert said that HomeSafe Second will continue to be “a better option for many borrowers 55 and older.”
But in the event that rates fall, the traditional Home Equity Conversion Mortgage (HECM) and first-lien HomeSafe products could offer “more attractive outcomes, as well as increased refinance opportunities for our borrower base,” she said.
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