Thinking Big in a Smaller Market

The bickering continues in Washington DC resulting from the budget stalemate and subsequent limited government shutdown. Veteran originators will recall a 16-day shutdown in October 2013.  During this time endorsements of all Home Equity Conversion Mortgages cease. All FHA mortgages stand to be impacted the most during this temporary shutdown. Payments to reverse mortgage borrowers will not be interrupted but endorsement numbers for December and January stand to be somewhat skewed as a result.

The number of federally-insured reverse mortgages endorsed in the month of December was just released. A record low 1,751 Home Equity Conversion Mortgages were endorsed. For some perspective December endorsements totaled 4,765 in December 2017, 4,658 in 2016, and 4,233 in 2015. This December’s volume was somewhat of an outlier being only 68% of November endorsements, whereas in previous years December typically reached 90-100% of the prior month’s volume.

While we may collectively dream big as to how we would like to see our business and industry grow in 2019, we must also embrace the fact that we are a much smaller industry than just a few short years ago. As a result, brokers and lenders will become increasingly lean in their overhead costs and nimble in their marketing efforts. Long-term operators have addressed these challenges 10 years ago in the wake of the housing and economic crisis of 2008. What’s different this time is that interest rates are relatively stable and home appreciation is slowing moderately. The two legacy reforms that continue to impact the acceptance of the HECM are the decreased interest rate floor of 3% and numerous principal limit factor cuts...