California Reverse Mortgage Lender Gets Direct Approval Authority, Eyes Bigger Business
California-based reverse mortgage lender Ennkar obtained direct approval (DE authority) from the U.S. Department of Housing and Urban Development in March, and has been looking for the best way to expand its presence in the reverse mortgage industry across the country. By gaining DE authority, Ennkar is now able to underwrite and close mortgages without prior Federal Housing Administration (FHA) review, but has plans for other ways to establish itself in the market.
To get an idea of what the new authority means for the lender and its future operations, RMD spoke with the lender’s chairman, Omar Ennabe. Having already done record business at the height of the COVID-19 coronavirus pandemic, Ennabe hopes that Ennkar will provide another option to the industry in the unusual times that are likely to lie ahead.
Obtain direct approval authority
Before the pandemic, Ennkar requested his DE authority because it was seen as a natural progression for his business, Ennabe said. However, due to a technicality, the authority was not approved during the initial application period. While fully intending to rectify the error, the pandemic turned the world upside down and the focus had to be elsewhere. What ultimately drove the Ennkar team back to authority was the industry landscape, says Ennabe.
“Everyone subscribing right now is just being criticized,” says Ennabe. “They promise you 24-48 hour turnaround times for underwriting, but that’s not true. Most of the top 10 lenders minimize all of their lead times. They may tell you 48 hours, but it takes three to four days before you can get a response that the submission has been accepted.
The slowdown in other areas of reverse mortgage processing has also been noticeable for Ennkar and its partners, issues that are compounded by the well-documented issues facing real estate valuations and issues facing notaries, says- he.
“I guess in all areas everything is slowing down,” he said. “So we looked within and asked, what can we do to improve our turnaround times for our customers? And that [came down to asking], and if we started to subscribe internally? We use a subscriber to subscribe exclusively to Ennkar, which could then lead to other sources of revenue, such as third-party creators. So that’s what we did.
After running a few feelers, Ennkar found a highly qualified candidate who had experience with another large reverse mortgage lender who helped the company complete its necessary test cases and who shares the goal of streamlining some of the ways the reverse of which the mortgage industry operates.
Ennabe is quick to praise the key members of staff who helped the lender gain its DE authority, including Business Operations Manager Amy Golomb, Underwriting Manager Charmane Ng and Lending Operations Manager Amy Kramer.
“I don’t deserve much credit for getting Ennkar through HUD’s DE approval process,” he says, “We brought in a very talented and experienced group of people who deserve all the credit and did all the heavy lifting. These individuals are the magic behind this next great phase of Ennkar’s future.
Achieved and future objectives for the reverse mortgage business
Now that the goal of gaining DE authority has been achieved, the company wants to focus on the future of its reverse mortgage business. That future includes exploring business channels that were previously unavailable to the company, according to Golomb.
“Now that Ennkar is approved by DE, we look forward to starting wholesale accounts in the not too distant future,” she told RMD. :Ennkar believes our unique approach to the process will be a real game-changer for brokers looking to do reverse lending. Ennkar and our proprietary technology will be the best resource for non-reverse brokers looking to enter the space. Ennkar will help ensure that brokers understand the product and the process in order to move their cases seamlessly through the various stages.
The ability to act independently is a big part of Ennkar’s appeal and future plans, adds Ennabe.
“We won’t have to rely on the biggest reverse mortgage lenders anymore,” says Ennabe. “It’s now 100% internally controlled, which means a lot more management and hiring a lot more people. That’s what we’re working on right now, and that’s part of the reason I want to spread the word. Ennkar is going to the majors, maybe we got promoted to the major league. It will help us control everything internally, and we feel like we have a really nice and streamlined process.
The importance of technology for the future of reverse mortgages
Existing lending processes and the current means of accomplishing them are also a big problem for the reverse mortgage industry per se, says Ennabe. That’s why following some of the processes using the technology could make a difference in the industry, says Ennabe.
“There can be so many ways to build a case that it’s hard to learn a million different ways to do something,” he says. “That’s why I think technology is what we need in our industry. We need to get more technology on our end so that the files are submitted in exactly the same order and in the same way. It makes it cleaner, and that’s what Ennkar wants to do differently from the greats. We will use the technology on a large scale in the future.
This incorporation of technology is one of the main ways Ennkar hopes to stand out when vying for business against larger competitors, Ennabe says.
“We think the disruptions hurt a lot,” he explains. “We plan to integrate the technology even when we go to creators and third-party brokers, and try to recruit them to send business to Ennkar. This is what the DE authority gives us access to be able to do. So now we can actually pull out our own list of rates, we can try to get business from brokers instead of sending it to other lenders. We think we can stand out because we can underwrite them internally.
Based on Wholesale and Retail Reverse Mortgage Data compiled by Reverse Market Insight (RMI), Ennkar was the 11th highest-ranked reverse mortgage lender in the country, recording 1,004 endorsements in the 12-month period ending February 2022.