SAN ANTONIO — Southwest Business Corporation recently announced that it has added a Reverse Mortgage Division to its credit union mortgage services menu. SWBC President/CEO Gary Dudley said the company recognized the growing demand for the product and was responding to CU-client inquiries.
Aimed at homeowners who are 62 and older, a reverse mortgage can supplement income for people who have established equity in their homes, even if they don't own them outright, said Gayle Spillman, head of the division. It allows for income even as the homeowner remains in the house, by either drawing on a line of credit (which can pay interest) or be tied to a 10-year Treasury bill or a fixed rate. "HUD started this program, and it can help people in that age bracket because it is tax exempt. Fannie Mae also has a reverse mortgage product and there are several other proprietary programs as well," said Spillman. "We use the HUD program and it is a 50% loan to value product."
"Disclosures are all important to making sure homeowners and their family members understand how reverse mortgages work," said Dudley. Spillman said she meets with prospective clients at least twice, and always asks that other family members be present. That allows her to thoroughly explain how reverse mortgages work and can avoid family members harboring feelings that their inheritance may be slipping away.
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"There were 76,000 reverse mortgages done nationwide last year," Dudley said. The new division is less than one-year old and until now was not heavily promoted, but has grown over the past months, said Spillman. "We're seeing an increase in the number of clients that credit unions refer and attribute that to them understanding the educational process that goes into it. They're getting it now. We started at zero and then went to two, then four, and just closed eight loans last month. At the end of the year we expect to be doing about 30 per month." Dudley said SWBC planned to grow into being the best and most reliable source for CUs to send their members to for reverse mortgages, even as members trust their credit unions for good advice.
In business for 31 years, SWBC (www.swbc.com) has been providing mortgage programs for 45 credit unions nationwide. SWBC Mortgage Corporation closed $60 million in first mortgages last month and is projecting $700 million in business this year, about half of that for credit unions. SWBC also offers insurance and investment products. It serves 1,200 credit union clients.
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