Jesse Allen on executing Rate’s reverse mortgage strategic blueprint

Neil Pierson: You came to Rate 18 months ago to lead the reverse mortgage division. What have you been able to do since then to bring your vision and strategy to life?

Jesse Allen: That’s been a fast 18 months. The short version of that story is we were able to quickly build on the existing platform that was here. Rate has been passively doing reverse for years — 100 loans or so a year, just because of the power of the brand and the distribution.

Before I joined the team, they had put some effort into really growing the business, and they doubled the business in 2024 versus the year before. But it got to a place where they decided to really go after it as a growth business versus a product offering. And that’s when my team and I plugged in.

We built on anything and everything that was working, like a lot of the infrastructure they had in place with the traditional forward mortgage loan officers in getting them trained. Last year, we saw the number of traditional LOs that participate in reverse go up by 60% year over year.

We had to scale the entire platform, from the LOS to the CRM. We’re gaining share — in March we were 100 basis points better on market share, probably one of the fastest-growing lenders. So we’re pretty happy with the progress, but we have a ton of work to do.

Pierson: Everyone can see you’re growing in the HECM market, but proprietary products are what most companies are relying on today for growth. What is Rate doing in that arena right now?

Allen: 55-plus lending is how we go to market. And within that, we have a full suite of reverse products and all of the mainstay, proprietary products that are available in the marketplace. We have five different investors with these products. We offer all of them on a nondelegated principal agent basis, so we don’t have our own proprietary products, but honestly, I don’t see the need for it.

Most of the investors, we have great relationships with them — Longbridge Financial, Finance of America, Mutual of Omaha, Smartfi Home Loans, Nationwide Equities. We trust their service levels; we know their operators. With everything else we had to do, deploying our own proprietary loans wasn’t at the top of the list, so we decided to just add all their products.

Proprietary, as a mix of our business, is a really significant portion of the growth. Last year, I would say, it accounted for 30% of our client transactions and probably 55% or 60% of our dollar volume.

I think that a full product suite is important because HECM is an important cornerstone to the industry. But there are some guideline reasons where that product doesn’t. fit. Similar to forward mortgages, where if the government or conventional products don’t fit, you want to come in with non-QM, I think proprietary reverse is a way to think about how to serve clients that the Federal Housing Administration (FHA) doesn’t.

It’s been a great, natural evolution, and it’s certainly broadened the number of clients we can serve as an industry. Finance of America’s HomeSafe Second is an example of that — a second-lien product that didn’t exist before. That opens up the box to help more clients who are comfortable with their debt service. They don’t want to refi, but they want to tap their equity with some of the benefits of a reverse mortgage.

Pierson: Let’s change gears and talk about Hispanic homeownership, since that’s really driving U.S. homeownership growth in general. Rate has made a concerted effort to serve underserved borrower communities like this, so how does that fit into your strategy for reverse?

Allen: I think it’s safe to say Rate did put a stake in the ground several years ago around serving the multicultural client — and specifically, Hispanic clients — end to end.

We’re in the early stages as it relates to reverse. As a great example, we’ve identified where we can move the needle while working on the technology components to catch up, which in reverse is always a long journey.

We took a look at all of Rate’s retail loan officers, vice presidents who are trained and certified to participate in the multicultural business. They’re bilingual, in many cases. All these VPs that are working with the Hispanic market and are also certified to do reverse, we’ve aligned them to a Spanish language specialist. We’ve seen some early success there, but we have a lot of work to do to fully engage in that strategy.

Pierson: A recent report showed a large financial gap for many seniors who seek reverse mortgage counseling. It struck me as interesting, because some have argued that to grow the reverse mortgage market, you need to go after wealthier, non-needs-based clients. But there’s evidently many people who still need a reverse mortgage for emergency funds. How do you balance the needs of this group while growing sales through other types of borrowers?

Allen: It’s a great question. In fact, we’ll do a couple of sessions at the upcoming NRMLA Western Regional Meeting on how we, as originators, should support the appropriate use of the appropriate product with the appropriate client at the right time.

Proprietary product evolution is happening at light speed, based on the historical perspective in the industry. And I think that emergence of product complexity makes it harder for loan officers while creating a ton of incremental opportunity. I think the industry needs to continue focusing on, how do we help loan officers identify the right product for the right client at the right time?

I bring that up because it’s sort of connected to this question about product expansion, growing the pie and really identifying that next tranche of more strategic use cases who want to monetize their equity for better retirement outcomes. That’s a massive opportunity for the industry and, frankly, for families and communities. People need to monetize their equity without the debt service.

It is also true that we can’t forget the legacy buyer in the space, the more needs-based client. Maybe they had a foreclosure notice. Maybe they’re running behind with taxes or they’re inundated with unsecured debt. We know that 97% of people who go into retirement today do so with debt. Mortgage is a big piece of that unsecured debt.

While the industry is very enamored with pie growth and serving new clients with proprietary product innovation — and rightly so — it is equally important to stay focused on our legacy clients and serving those who are in most need, which was the catalyst for the industry to begin with.

Pierson: Lastly, let’s talk about home equity investments (HEIs) which have been a controversial product recently. There are lawsuits being filed against providers all over the country. The products aren’t just for senior borrowers, but they can compete against traditional reverse mortgages. How do you frame your client conversations around HEIs?

Allen: It’s a big topic. I would say the existence of these home equity investment products and more creative HELOC programs — like Longbridge’s HELOC for Seniors and Finance of America’s HomeSafe Second — send a very clear message that equity release is a really big deal. We need to help consumers access their equity in responsible ways in order to drive better retirement outcomes.

I’m not an expert on the HEI business, but I think the important piece is about consumer education, disclosure and a well-trained sales force. So you think about third-party, independent counseling that we’ve had in reverse for years. I don’t believe that’s required for an HEI program. I do think you need this overlay of safeguards, depending on who you’re serving.

When it gets down to the client discussion, what I say to family members or our financial adviser referral partners is, “The devil’s in the details.” You have to understand the product, and you’ve got to work the math. These products can be very confusing.

We have robust disclosures in mortgage banking. I think alternative product solutions are healthy, but they still require rigorous consumer safeguards, and I think the reverse mortgage industry, frankly, could be a good template to use when you start thinking about alternative products.