Proprietary reverse mortgages have gained a lot of traction over the past year and now account for more industry volume than federally insured Home Equity Conversion Mortgages (HECMs). With the help of loan officers Nathan Guerrero and Jackson Matheson, Tennessee will soon join the list of states to allow private-label reverse mortgages.
Guerrero, a reverse mortgage specialist and president of Mortgage South, and Matheson, an LO with Fairway Home Mortgage, played instrumental roles in the creation of the Tennessee Reverse Mortgage Innovation Act. The bill has passed both chambers of the state Legislature and is expected to be signed into law by Gov. Bill Lee in the near future.
In an interview this week with HousingWire‘s Reverse Mortgage Daily (RMD), Guerrero and Matheson explained how the lobbying effort went and what they hope will happen once senior homeowners in the state have more options for unlocking their home equity.
Matheson, a U.S. Army veteran who entered the mortgage business in 2020, said he was motivated to change the state law after repeatedly losing leads for jumbo reverse mortgages in the Nashville area.
He connected with the Tennessee Mortgage Bankers Association (TMBA), where Guerrero — a longtime industry professional — had been laying legislative groundwork for years. Along with lobbyist Chuck Welch and strategic legislative sponsors, they shepherded the bill through the General Assembly.
“I’ll say now, humbly, there was no chance of me doing it by myself without the Mortgage Bankers Association,” Matheson said. “This was a little bit reactive — like 20% reactive. We had to fix it for today, but I think it’s 80% proactive for the future and letting our industry continue to grow.”
which is expected to be signed into law by Gov. Bill Lee. Photo courtesy of Nathan Guerrero.
Mortgage South, founded in 1986, was responsible for the state’s first HECM origination in 1993. Guerrero has been with the company since 2005 and is now a co-owner alongside his wife, Candy. He began to see the need for proprietary products after the Federal Housing Administration implemented major changes — including lower principal limits and higher upfront mortgage insurance premiums — to the HECM product nearly a decade ago.
“I can tell you from experience, getting anything like this done comes down to relationships and making those investments over time,” Guerrero said. “By doing that … we kind of had the traction and the credibility to be able to facilitate us using our political capital for this year to pursue changing the reverse mortgage law.”
Longbridge Financial works with Matheson and Guerrero to finance many of their deals. CEO Chris Mayer said his company welcomes the long-awaited change in Tennessee law.
“Tennessee has long been an underserved market for seniors who want to access their home equity but don’t fit neatly into the federal HECM program,” Mayer told RMD via email. “This legislation changes that. For older homeowners in Tennessee, proprietary reverse mortgages offer a flexible, responsible path to financial security in retirement with many more options than the HECM program — and that access is long overdue.”
Matheson said that while the law in Tennessee is changing, lenders and investors will have to make changes to offer proprietary products before the business sees a boost.
“I’m not sure what that timeline is going to be … but at some point, it’s just going to give us more flexibility and more options to present to borrowers for different solutions, whatever that case may be,” he said. “And I would say the primary one is the jumbo capability, just the higher loan amounts as Nashville, Knoxville, Memphis and Chattanooga have definitely seen huge [home price] appreciation and are starting to outpace the HECM loan limit or the maximum claim amount.”
Guerrero said the legalization of private-label reverse mortgages in the state is somewhat of a relief as it will shield originators from any further changes to the HECM program. After years of declining volumes in that space, the U.S. Department of Housing and Urban Development (HUD) has solicited industry feedback on potential changes, although a timeline for announcing and implementing anything is not yet known.
“It was always a concern of mine that they would come in at a whim, change the FHA product, and we’re sitting out here dangling in the wind with no other options in the state of Tennessee, and then trying to get a bill passed,” Guerrero said. “So by doing that [getting the bill passed], I think it also protects us in a way, to have other options available in the private market, regardless of what the FHA loan is doing.”
Proprietary reverse mortgages are now allowed in about 30 states. They are frequently structured to exceed the HECM limit, but they can also serve borrowers who don’t qualify for FHA products for various reasons.
“The HECM limit for 2026 is $1.25 million, but we’re seeing demand for proprietary all the way down to a couple hundred thousand dollars,” Dan Hultquist of REVERSE plus and Movement Mortgage told RMD in February.
“That’s pretty fascinating to me, because we always called them jumbo loans. We’re finding that approximately 50% of the demand is for jumbo, but the other 50% is condos, expanded age eligibility or paying off unsecured debt at closing — which is also something that HUD absolutely needs to consider.”