Reverse mortgage company’s expansion reveals universal business truths, lender says

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Canadian reverse mortgage company Bloom Finance Company, Ltd. entered the reverse mortgage market in this country last fall as a fintech company based in Toronto, Ontario. One of the ways it has sought to differentiate itself from its competitors is through its status as a technology-driven company on the back end of lending. It is also only the third major provider of reverse mortgages in its country, expanding a market that has room to grow.

The company recently announced that it is expanding its business footprint from the country’s most populous province, Ontario, to the third most populous province of British Columbia (BC). British Columbia borders Washington State to the south and, like the US Pacific Northwest, has seen significant home price appreciation, with average values ​​exceeding the national average.

To get a sense of the competitive lessons Bloom learned before and after its expansion, RMD spoke with company founder Ben McCabe, who also revealed that in addition to carving out a place in the Canadian market , discussions with U.S. reverse mortgage providers have also revealed some interesting truths about the nature of reverse mortgage business that apply equally to both countries, McCabe says.

Collaboration with the American market

Since Bloom entered the space late last year, he’s had two-way conversations with U.S. reverse mortgage providers. Although McCabe did not specify which companies he spoke with, he describes the dialogue as constructive and informative.

Ben McCabe

“We’re in active dialogue with a number of US players, just giving them an update on some of our plans and negotiating notes,” McCabe said. “I think one of the advantages we could have in the Canadian market versus the US is obviously there’s a lot of flexibility around these US-exclusive products. But we don’t have the equivalent of a Home Equity Conversion Mortgage (HECM).

The Canadian market is also much less populated than its American counterpart, but this also plays into the regulatory landscape which tends to work a little differently. On top of that, the Canadian government isn’t involved in the country’s major reverse mortgage offerings, McCabe says.

“Because there’s not the equivalent of the Federal Housing Administration (FHA) dictating all these different dynamics, I think we have more flexibility to be more potentially creative in terms of product structure and process. “, says McCabe. “Because we work with regulated financial institutions, our regulator [the Office of the Superintendent of Financial Institutions {OSFI)] has a look at us. So obviously we have to make sure that we do our business to that regulatory standard. »

Technology as a differentiator

At the same time, however, being creative in the marketplace is one of the things that likely helps Bloom stand out in his own country. McCabe describes Bloom as a fintech company, but that’s largely due to loan processing in the background as opposed to consumer interactions.

“We don’t offer a very ‘tech’ solution to clients, we mostly use technology in the back-end to reduce the amount of work they have to do to get a loan from us,” says McCabe. “Basically, we’re using technology to reduce user input to zero and reduce the type of paperwork we require of them. So, rather than having to send us documents, we can simply obtain their consent to access their information in other ways.

Bloom also uses contactless assessments to minimize the need for others to enter a client’s home. Incorporating technology into the back of the equation simply adds to an experience that Bloom hopes translates into a positive customer experience.

“We plan to use technology primarily in the back-end to ensure that 90% of the conversations we have with customers are about asking us questions, not asking us questions,” he says.

Universal Truths About Reverse Mortgages: Customer Experience and Education

While the details of each respective reverse mortgage market are quite different, McCabe believes there are at least some commonalities that can be shared between the respective companies in the two countries. In the end, it all depends on the quality of customer service, he explains.

“What we’ve learned is that there really is a way to differentiate and win in this market based on customer experience,” he says. “Based on creating the most elegant, simple and seamless customer experience possible. Rates, loan-to-value ratios and fees are certainly important in the client’s decision. But, one of the things we’ve found is that the ability to provide a simple, elegant, user-friendly, and comfortable customer experience — end-to-end — can be a winning proposition in this market.

Like the US market and its competitors in Canada, Bloom has been looking for ways to more effectively educate potential customers about reverse mortgage applications, McCabe says.

“Education continues to be one of the main things market players continue to focus on,” he says. “Talking to customers, explaining the product to them and helping them understand whether or not it’s the right solution for them. What I would say is that I have noticed a significant shift over the past few years in terms of media attention in Canada around this product. Overall, nine out of ten media outlets I’ve seen in Canada over the past few years focused on reverse mortgages have been overwhelmingly positive.

This comes with the caveat that many such covers often qualify that this is not a product that works for everyone, but it is nonetheless seen as a sign of progress.

Financial Advisors and the Reverse Mortgage Industry

McCabe also explained the last time he spoke with RMD that the US market’s focus on courting financial planners is something he would look to do in his business, and that move also made progress, he said.

“We have definitely started our outreach efforts with financial advisors, members of the wealth management community, and I think we get a great reception when we talk about how helpful this product is in clients’ financial plans. , ” he says.

As more people begin to look at where the greatest concentration of wealth is for the majority of older homeowners, the equation isn’t hard to solve regarding a largely untapped asset, he says.

“I think everyone has just realized – seeing how disproportionate home equity wealth is to other parts of the retirement portfolio – that if you give financial advice to people it behooves you to consider accessing some of that home equity as part of improving the quality of life and ensuring that the person is living a retirement they can truly afford.

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