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Slow & Steady Growth Depends on Partnering with Financial Professionals
Since the housing and economic crash of 2008 our industry has had its collective eye focused on the horizon seeking for signs of a significant rebound in reverse mortgage volume. Despite earlier predictions we have come to realize that the growth of the Home Equity Conversion Mortgage will be slow and steady. With this realistic view in mind more lenders and brokers are seeing the value in partnering with financial professionals.
While the return to annual HECM endorsement volumes exceeding 100,000 units may be some years away future growth may be fueled by increasing acceptance by the financial planning community. Several factors have contributed to the increasing acceptance of the reverse mortgage in the media and by financial professionals alike: consumer safeguards, reduced costs, the rediscovery of the HECM line of credit and recent studies illustrating the benefits of incorporating the loan into modern retirement planning. The tide has begun to turn when it comes to the acceptance of a long misunderstood and maligned loan.
“There are several signs in the air that the world is starting to get a little different,” said Tom Davison
Download a transcript of this episode here.
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1 Comment
While there is a need to remain positive, being realistic requires looking at things the way they are, not how we would like them to be (optimism). Recently I read of someone who states that he is a realistic optimist. This person must be so conflicted I am concerned for him when he turns off the lights at night.
Being realistic requires us to evaluate where we are today in comparison to where we were last fiscal year and even in comparison to this entire decade. If you believe in the industry four month lag rule, the reasonable accuracy of a modified annualized conversion rate, and the integrity of the numbers HUD supplies us monthly including HECM case numbers assigned, the first six months (ending March 31, 2016) of fiscal year 2016 looks to be one of the worst, and very probably the worst, in over a decade.
Do not be fooled, after seeing case number assignments through November 30, 2015 and the very low endorsements for January 2016 of just 3,890, in comparison to fiscal 2015 or any fiscal year in the last decade we are not in recovery. We are still bottoming out. Now that that could turn around in the last half of this fiscal year (the view of the optimist) but realistically there are no known events on the horizon that will allow us to achieve that objective. The pessimists in the industry will point to the first month of this fiscal year with under 4,000 endorsements and question how will we see 4,000 endorsements for a single month any time soon.
Some of us who are positive realists believe that fiscal 2016 could be the fiscal year we bottom out with fiscal 2017 seeing some real long-term gains in endorsement growth. Baby Boomers have proven to be a stubborn lot but sooner or later they will realize the value of taking a HECM. After seven plus years of seeing them turn 62, they are not as ready for HECMs the way we were led to believe in the past.