If more than one-third of your reverse mortgage loans are HECM-to-HECM refinances you’re running out of time. Time to refurbish your loan pipeline. Time to build effective and productive referral relationships.

The surge in HECM-to-HECM refinances transactions is neither unexpected nor unethical (in most circumstances). In March 2020 as the world held their collective breath wondering if the Coronavirus pandemic would wipe out housing values and the equities market, HECM refinances represented only 24% of applications issued an FHA case number assignment.

The genesis of the housing & refinance boom

Stay-at-home orders and the coronavirus pandemic led to a 25% increase in delisted homes (removed from the market) in April 2020 from the prior year. New listings dropped and as housing inventories continued to contract. The fuse was set and primed. Then came the Federal Reserve’s slashing of interest rates coupled with stimulus payouts. The fuse was lit and the housing boom began in earnest.

While surging home values and record-low interest rates spurred a binge of home buying many homeowners with a reverse mortgage sensed an opportune moment to harvest more of their home’s value. Most HECM lenders gladly serviced refinance requests while marketing to their existing clientele. Consequently, the percentage of HECM-to-HECM refinances surged to 31% of all case numbers in June 2020, 42% in February, 48% in March of this year.

Not unlike California’s water the supply of potential borrowers eligible for a refinance is a finite resource, one that is certain to slow from a river to stream. All this means those heavily engaged in refinances are running out of time to shift to a more sustainable supply of potential borrowers.

Preparing for a typical lending market

Here are a few ways one can bolster their loan-term loan production to protect their sales pipeline.

• Each day call at least 2-3 existing referring professionals in your network to stay top-of-mind and strengthen your connection.
• Call at least 5 potential referring partners each week to expand your network.
• Don’t neglect the sales and prospecting activities you once focused on before the refinance boom. If you have now is the time to get back to basics.
• Revisit your list of previous leads. Many may now qualify thanks to high home values and low rates. A CRM can help you isolate potential borrowers in mere seconds.
• As inflation and economic uncertainty grow make yourself available for interviews with your local newspaper, radio stations.
• Contemplate direct mail marketing. Fewer originators are actively mailing today which means you may stand out more than before.

Like time opportunity is a finite resource. Seize it when and where you can just as most did with refinances. Carpe Diem!

-Shannon Hicks