Key facts
- Texas Mortgage Source LLC sees the reverse mortgage market as the largest underserved segment due to nearly $15 trillion in equity held by U.S. senior homeowners.
- Reverse mortgages can be used to cover healthcare costs, home modifications, supplement income, and pay off debt.
- Home Equity Conversion Mortgages (HECMs) are insured by the Federal Housing Administration and require borrower counseling.
- Reverse mortgage borrowers retain title to their homes, and loans are non-recourse, meaning heirs are not liable for debt exceeding the home's value.
- Upfront costs for HECMs, including mortgage insurance premiums, can be rolled into the loan.
Mark Hairston and Shara Parker, co-owners of Texas Mortgage Source LLC, are actively promoting reverse mortgages, viewing the sector as the largest underserved market due to the substantial equity held by senior homeowners. Hairston, who attended the inaugural Reverse Mastermind Summit, was inspired by the product's potential and has since increased the company's focus on originating these loans.
During a breakout session at the Association of Independent Mortgage Experts (AIME) Fuse event in Austin, Hairston and Parker shared insights on reverse mortgages, including Home Equity Conversion Mortgages (HECMs) and proprietary products. They also discussed reverse-for-purchase opportunities, which have been available since 2009 but remain largely under the radar for loan officers and real estate agents.
Hairston, who has 40 years of experience in forward lending, admitted to a past lack of understanding about reverse mortgages, initially believing they were only for those with no financial resources. Parker, who spent two decades as a Realtor before entering mortgage lending, emphasized the need for patience and empathy from professionals in this field, noting that transactions often involve multiple parties like financial planners and family members.
The duo presented several case studies, including a 71-year-old homeowner who used a HECM line of credit to pay off his mortgage and gain access to $100,000 for travel and expenses. Another example featured a 78-year-old woman facing foreclosure who secured a HECM to pay off her debt and establish a life expectancy set-aside for property taxes and insurance. A third case involved a couple using a lump-sum reverse mortgage payout to divide equity from their $500,000 property during a "silver divorce."
Hairston and Parker also addressed common objections and risks associated with reverse mortgages. They cautioned against overselling the product and stressed the importance of transparency regarding accruing interest, potential reduction in equity for heirs, the necessity of paying property charges, and upfront costs like mortgage insurance premiums. However, they countered misconceptions that banks own the home, clarifying that borrowers retain title, and highlighted the non-recourse nature of HECMs, which protects heirs from owing more than the home's value.