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Special Reports
Reverse Mortgages
International Parent Helps Firm Expand Options
By Bonnie Sinnock
The U.S. reverse mortgage world has been and remains dominated by the Federal
Housing Administration's Home Equity Conversion Mortgage product. But there are reverse mortgage needs outside
of what HECMs can provide, according to David Peskin, chief executive officer of World Alliance Financial, a k
a Lender Lead Solutions, here.
Reverse mortgages' favorable demographics and a relative lack of growth opportunity
elsewhere in the residential real estate finance market also support product diversification efforts, he said.
WAF/LLS aims to address this by providing products that range from new forms of HECMs to nonconforming products,
Mr. Peskin said.
His company, which is affiliated with the Brussels, Belgium-based KBC Bank, has
been looking for and adding brokers and account executives to help originate reverse mortgage products. The company
also has built a national wholesale platform and offers LLS University, which specializes in reverse mortgage training.
It also allows brokers that do not have FHA approval to refer HECM loans to the company. This practice has been
under some scrutiny due to concerns about excessive fees and is governed by particular Department of Housing and
Urban Development guidelines that Mr. Peskin said he is aware of and stays within.
Recent hires by the company include vice president of sales Adrian Prieto, who
previously was regional manager for the Eastern region at reverse mortgage lender Financial Freedom and has experience
domestically and internationally with wholesale distribution channels.
Mr. Peskin stresses that any originator eyeing the niche should realize it is
consultative in nature rather than simply sales oriented. Controversial discussion of possible loan "suitability"
and "fiduciary duty" requirements for the mortgage market in the wake of the "subprime" debacle
and worries on the part of National Reverse Mortgage Lender Association officials that concerns there could migrate
to the sensitive senior-borrower-based reverse market are among the reasons for this.
He said loan consultants, particularly given the product diversification trend,
are trained to ask clients "all the right questions" and approach the process more like investment houses
do in selling financial products rather than simply selling a mortgage.
While selling large volumes of diverse and risky products ill-matched with borrowers
has been blamed for subprime woes, Mr. Peskin believes diversification in the reverse mortgage space will be helpful
to consumers as long as sales are handled in a properly consultative manner. It will give customers a range of
products that may more closely fit their needs rather than being restricted to a one-size-fits-all product, he
said. Clients who are assured that their long-term finances are secure but may want a relatively smaller amount
of extra money at a lower cost in the short term at 60, for example, would not qualify for a Home Equity Conversion
Mortgage until they are 62. But they might find WAF's Simple60 nonconforming product helpful, Mr. Peskin said.
In contrast, clients who needed a larger amount of money to ensure they would be provided for on a more long-term
basis would not be matched with a Simple60 product but might be matched with a HECM, he said.
Previously only a local company, WAF/LLS has benefited from its acquisition by
KBC Bank in terms of the additional capital resources and ability to originate new products the international financial
institution has brought to the table, Mr. Peskin said. Since WAF/LLS now has an international partner and reverse
mortgages or their equivalents do exist in some international markets, one might wonder if the company's efforts
might eventually involve some degree of international expansion. But Mr. Peskin said he sees no immediate interest
in doing so given the unmatched attraction of the domestic market's government support and demographics.
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