The nation’s leading reverse mortgage provider is expanding into traditional home loans to help seniors who want an alternative for tapping into their home’s equity to help pay the bills during retirement.
Orange-based American Advisors Group is expanding into conventional home loans. The firm announced Wednesday, Feb. 7, it recently leased an 11,000-square-foot office in Folsom where 70 to 80 new loan officers will oversee the company’s new mortgage operation.
The firm said it also will offer broker referrals to help its clients sell their homes or buy new ones as another way to tap into their home’s value.
“AAG’s new traditional mortgage option is designed for customers who are not eligible or choose not to move forward with a reverse mortgage loan, but want to use their home equity to achieve a better retirement,” said Paul Fiore, AAG’s chief sales officer. “AAG’s loan officers really understand the needs of seniors, and it’s clear that our customers appreciate having options because options allow them to see the whole picture when planning their financial future.”
AAG issued almost 13,000 of the 57,000 reverse mortgages approved last year, figures from Reverse Mortgage Insight show.
A reverse mortgage is a mirror image of the traditional home loan, allowing borrowers to get monthly checks, a line of credit or a lump sum payment from the lender instead of having to make regular mortgage payments.
While traditional mortgage borrowers pay down their debt over time, a reverse mortgage debt grows over time. But borrowers are guaranteed the right to stay in their homes until they die, provided they maintain their property and keep their taxes and insurance up to date.
Reverse mortgages are available only to homeowners 62 or older. The product got a bad reputation in years past because of high-pressure sales tactics, the use of smooth-talking celebrity spokesmen and accusations of deceptive advertising. Transaction fees and foreclosure rates also are higher for reverse mortgages, and a lot of borrowers lost their homes because they exhausted their funds and couldn’t keep up their properties or pay their taxes and insurance.
AAG, best known for having such celebrity spokesmen as Tom Selleck and the late Sen. Fred Thompson, launched an expansion last year to give senior homeowners more options than just reverse mortgages.
“For many retirees, income from savings and retirement accounts isn’t enough to cover (their) expenses,” said AAG Chief Executive Officer Reza Jahangiri. “When seniors include home equity in their retirement planning, proactively, they have better outcomes.”
AAG officials say they’re in the process of transforming their company from a reverse mortgage provider into a firm offering a range of services that can help house-poor senior homeowners use value built up in their properties to get cash. The plan includes not just traditional mortgages, but also home equity lines of credit and helping seniors sell their homes and relocate if reverse mortgages aren’t appropriate for them.
“We want to be more of a solutions business versus a single-product business,” Jahangiri told Southern California News Group last year.
In addition to the Folsom expansion, AAG announced earlier it’s moving its sales and marketing operation from its headquarters in Orange to a new office in Irvine. It also recently opened a new operations center in Austin, Texas.
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