The American Credit Union Mortgage Association (ACUMA) annual Make Your Mark conference in Las Vegas served as the backdrop for a critical industry discussion regarding the untapped potential of Home Equity Conversion Mortgages (HECMs) within the credit union sector. As the demographic profile of the average credit union member trends toward retirement age, industry experts argue that these financial cooperatives are uniquely positioned to provide, but are currently failing to capture, a significant portion of the reverse mortgage market.
Ron Kamler, president and CEO of Alliance Reverse Mortgage, and Brandon Bartholomew, mortgage sales manager at Mountain America Credit Union, headlined the session, highlighting a staggering discrepancy between the volume of eligible members and the actual origination numbers currently reported by credit unions nationwide.
The Statistical Gap in Market Penetration
The data presented at the ACUMA conference paints a stark picture of the current state of reverse mortgage lending among credit unions. According to industry metrics, out of nearly 36,000 reverse mortgages originated across the United States over the previous 12-month period, credit unions were responsible for only 81 of those loans. When juxtaposed against the fact that there are approximately 55 million credit union members who meet the age-eligibility requirements for a reverse mortgage, the data suggests a market penetration rate that is statistically negligible.
This massive under-representation in the HECM space is not merely a missed revenue opportunity; it represents a failure to protect long-standing members from predatory or high-cost lending practices found in the secondary market. For many credit unions, the hesitation to enter the space stems from a combination of regulatory complexity, perceived reputational risk, and a lack of specialized training for frontline staff.
Evolution of the Credit Union Approach: A Chronological View
The transition of credit unions into the reverse mortgage space has been slow, characterized by a shift from skepticism to cautious adoption. Mountain America Credit Union, based in Utah, serves as a primary case study for how these institutions can integrate HECM products into their broader portfolio.
The institution’s journey began in the late 2000s, driven not by a strategic push from management, but by direct member demand. Members were increasingly seeking out reverse mortgages from third-party lenders and approaching their credit union representatives to verify the terms of these outside quotes.
"They trusted the credit union to help them and advise them on what to do," Bartholomew noted during the panel. "That is one of the reasons we started getting into reverse mortgages—to help them, because we saw how much they were being charged. It was outrageous what they were being charged outside."
The timeline of Mountain America’s operational shift provides a blueprint for other institutions:
- Pre-2011: The institution maintained a singular focus on traditional mortgage products, relying on one specialized loan officer to handle infrequent inquiries regarding reverse mortgages.
- 2011–2015: Following the death of its primary specialist, the credit union committed to replacing the role, signaling a shift toward maintaining a dedicated in-house competency.
- 2015–Present: The institution pivoted to a decentralized education model, training all loan officers across its branch network to identify member needs, conduct basic screenings, and facilitate referrals to internal experts.
This evolution highlights a fundamental truth about the credit union business model: member trust is the most valuable asset, and that trust is often tested when members are forced to look elsewhere for financial products.
Training Gaps and the "Telltale" Barrier
A recurring theme at the ACUMA conference was the disconnect between member inquiry and staff readiness. Kamler pointed out that while members frequently turn to the people they trust most at their credit union—often tellers, branch managers, or call-center employees—these staff members are rarely equipped to discuss HECMs.
In many instances, employees, lacking formal training, default to an unhelpful "we don’t offer that" response. This creates a significant "service gap." When a senior member, who has been a loyal patron of a credit union for decades, is turned away, they are forced to search for products online, often leading them into the arms of high-pressure sales environments or institutions that do not share the credit union’s mission-driven ethos.
The proposed solution, as championed by Kamler and Bartholomew, is the implementation of universal, foundational training. By ensuring that every point of contact within a credit union knows how to identify the signs of a member seeking liquidity and how to route that member to the correct internal resource, credit unions can retain the relationship and ensure the member receives ethical, low-cost advice.
The Modern HECM: A Tool for Financial Planning
Perhaps the most significant barrier to broader adoption is the persistent stigma surrounding reverse mortgages. For decades, the product was marketed as a "last resort" for those facing dire financial distress, debt, or poverty. However, both Kamler and Bartholomew emphasized that the landscape has fundamentally changed.
"Twenty years ago, it was only for someone who’s out of money," Kamler explained. "It was a last-resort program. Today, the reverse mortgage is completely different. We’re serving members who are using it as a financial planning tool."
In the current economic climate, characterized by fluctuating interest rates and the rising cost of living, savvy retirees are utilizing HECM lines of credit as a hedge against market volatility. By establishing a line of credit that grows over time, homeowners can access funds during market downturns, avoiding the need to liquidate investment portfolios when asset values are low. This "strategic withdrawal" approach, often discussed by financial planners, allows retirees to extend the longevity of their nest eggs significantly.
Implications for the Credit Union Sector
The implications of failing to capture this market are twofold. First, credit unions are effectively ceding a growing segment of their membership’s financial lifecycle to external competitors. As the population ages, the demand for home equity-based financial tools will only intensify. If credit unions do not provide these services, they lose the ability to influence their members’ retirement outcomes.
Second, the lack of in-house expertise leaves a void in consumer protection. Credit unions, by their nature, are regulated to act in the best interest of their member-owners. By bringing HECM products in-house, they can ensure transparency in fee structures and provide unbiased counseling that is often missing from profit-driven private lenders.
For smaller credit unions that may find the compliance and overhead requirements of HECM origination prohibitive, the panel offered a clear alternative: strategic partnerships. Partnering with specialized reverse mortgage companies allows smaller institutions to offer the product to their members under a white-label or referral agreement, ensuring that the member remains within the credit union ecosystem while receiving professional-grade service.
Future Outlook and Conclusion
The consensus among the panelists was that the status quo is unsustainable. As the "Silver Tsunami" continues to reshape the American economic landscape, credit unions must decide whether they will evolve their product offerings or continue to watch as their aging membership base looks elsewhere for critical retirement solutions.
The path forward, as outlined at the ACUMA conference, requires a commitment to three pillars:
- Organizational Education: Training beyond the mortgage department to ensure all staff can identify and properly escalate member inquiries.
- Strategic Modernization: Updating the marketing and framing of HECMs to emphasize their utility as financial planning tools rather than products of last resort.
- Collaborative Origination: Utilizing partnerships or internal development to bridge the gap between institutional capability and market demand.
For credit unions willing to bridge this gap, the potential to serve their members’ long-term financial health is immense. The data clearly shows that while the market is vast, the current participation is minimal. The transition from a passive to an active participant in the reverse mortgage market may well be the next great frontier for the credit union industry, provided they can overcome the inertia of past perceptions and invest in the necessary expertise to serve their members where they are.
