Lender Name: Fairway Independent Mortgage Corporation

Headquarters: Madison, Wisconsin

States licensed: 50, plus the District of Columbia

Company leadership: Founder and CEO Steve Jacobson

Product offerings: HECM, proprietary reverse mortgages

Lender ranking: #9 based on HECM endorsement data compiled in January 2020

Brief history: While primarily seeing itself as a forward mortgage lender first and foremost, Fairway Independent Mortgage Corporation has nonetheless grown into a force to be reckoned with in the reverse mortgage industry. Founded in April of 1996 by Steve Jacobson and given its name by one of Jacobson’s lifelong friends, Fairway grew significantly over the next five years.

By the end of 2001, the company had grown to have closed over $1 billion in annual loans, and continued to grow at a marked place over the next several years after that. By 2007, Fairway had become a mortgage broker/banker with over 100 branches spread out across 40 states.

In December of 2007, Fairway made the decision to create its own, dedicated reverse mortgage division, primarily identifying that the business segment and the demographic it aimed to serve was showing visible and projected signs of significant growth. The already-established 40-state footprint of Fairway ideally placed it to become a major player in the reverse mortgage business soon after it implemented the product into its catalog of offerings.

“In order to properly service this growing segment, we knew we'd need to establish a division that ensures consistency and compliance,” said Gary Nelson, VP of national sales at Fairway Independent Mortgage at the time the division was first created to business publication Mortgage Orb. “Our reverse mortgage division provides support and training to all of our regional offices, so that they in turn can better serve the customer.”

Standardizing the way that reverse mortgages are delivered to seniors was a primary focus of the company at the time it decided to enter the space, Nelson said.

“As baby boomers age, more and more homeowners are becoming qualified for reverse mortgages every day,” he continued. “We're establishing a program to provide standardized delivery of reverse mortgages, so obtaining a reverse mortgage will be just as consistent, convenient and straightforward as getting a standard mortgage from any Fairway location.”

Like much of the reverse mortgage industry, Fairway was impacted by structural changes to the HECM program handed down by the Federal Housing Administration in October of 2017. These included a reduction in principal limit factors (PLFs), as well as a 2018 institution of a collateral risk assessment which sometimes results in the need for a property to require a second appraisal before a reverse mortgage loan is approved. The fundamental result from these changes – which were primarily made to stabilize the HECM program within its federal insurance fund – was an industry-wide drop in loan volume to record lows.

Fairway was not spared this fate either, but it has shown a surprising amount of resiliency in bouncing back from reduced volume levels just a couple of years after the HECM program changes were introduced. Not only did the company grow its total market share in the reverse mortgage industry by over 1% between 2018 and 2019, but its reverse mortgage endorsements in that same period were up nearly 4%. This is particularly stark when compared with the wider industry, which in the same time period saw a volume loss of over 30%.

One of the reasons that the company says it has had the success it has in a generally difficult reverse mortgage climate is its dedication to borrower education, and its position as a forward mortgage lender first is key to loan originators’ ability to present reverse mortgages side-by-side with other options.

“Fairway has a unique culture. The leadership, branch managers, and many loan officers have embraced the product and it is gradually spreading throughout the organization which is hard to find in a forward mortgage company,” says Jared Gibbons, national reverse mortgage sales manager at Fairway to industry publication Reverse Mortgage Daily. “[Our] culture of doing what is right for the client helps reverse mortgages to be accepted.”

One avenue that Fairway has not significantly explored is proprietary reverse mortgages, which many other companies have seen as a potential source for growth in the wake of current and potential future changes that the HECM program could receive from FHA. While Fairway has the ability to offer proprietary reverse mortgage products, they have not yet been a major focus of the reverse mortgage division.

“We are just getting started with proprietary and it has not had a big impact [on us] yet,” Gibbons continued in the Reverse Mortgage Daily article. “But we believe it will be in the future.”

Fairway is the ninth-largest reverse mortgage lender in the nation based on January 2020 HECM endorsement data. It continues to see significant potential in the future of the reverse mortgage market primarily because of the massive amounts of home equity that seniors have access to, and many older Americans will need to look at employing their home equity in order to achieve their retirement goals. This is according to Harlan Accola, Fairway’s national director in a 2019 interview with Financial Advisor magazine.

“There is over $7.1 trillion in home equity owned by seniors over the age of 62,” Accola told the magazine. “Let’s put the size of this potential solution in context – there are currently outstanding over $1 trillion in car loans, over $1 trillion in student loans, and in excess of $800 billion in credit card balances. The truth is that using the $7 trillion in home equity must be [leveraged] in order to give baby boomers, the retirement they need and want.”