The Uphill Battle for Market Acceptance
Like the mythical phoenix, the Home Equity Conversion Mortgage industry rose from the ashes of the housing crash and economic crisis of 2008, followed by several reincarnations as the reverse mortgage program was tweaked, pruned, and curbed the pool of eligible borrowers. Yet, despite the undeniable lack of retirement preparedness among retiring homeowners, reverse mortgage acceptance and market volumes remain relatively stagnant. Notwithstanding these hurdles, several industry participants and financial pundits believe the HECM is poised for growth.
Much like Sisyphus who eternally pushes a rock up a hill- only to have it continually come back down, our industry pushed forward past the housing crash as home values rebounded, only to be pushed back by a never-ending onslaught of new rules and product restrictions. Do we resign ourselves to unexceptional growth in the coming years, or explore more useful ways to capture the imagination and hearts of older homeowners?
Our industry has been steadily and quietly rebuilding as lenders have not only adapted to the new landscape of HECM lending and regulations, but also their marketing approach. As we stand midway between the past economic crash and future opportunity we should invest our time wisely to prepare. Chief among those preparations is how we approach eligible homeowners. As counterintuitive as the reverse mortgage is, we must avoid using mortgage terminology that is not analogous to traditional mortgages such as…
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Since fiscal 2007, our industry entered a period of two years of stagnation, followed by three years of horrific losses, and now five straight years of ongoing stagnation. During fiscal 2008 and 2009, the trend in stagnation was simply upward but during fiscal years 2013-2017, the overall stagnation has been peaks followed by valleys but on a downward slope.
So the decade ending on September 30, 2017 has been marked by stagnation and loss. Runaway HECM endorsement growth is the in the memory of the optimists of “yesteryear.”
Growth is a discussion over a few whiskeys not one of serious planners. If it were, in a decade we would have had some years of substantial growth.
We are not going to work our way out of this mess by H4Ps. That kind of talk is for the ignorantly unobservant. As to financial advisers after five years where is their mark in our industry? The only mark made by the Baby Boomers is its lack. As to the incredible rise in home values and the resulting home equity, there is not even a scent.
What no one can point to is how the next decade that starts on October 1, 2017, will be marked by annual substantial endorsement growth. Many want to do this and will vocally claim it but where is the proof? We have had a decade of no substantial growth at all but of horrific losses and stagnation. What happens after 9/30/2017 is anyone’s guess.
I would hope we all have a Brandy and relax a bit. The despair we all feel from the slow but sure fall of HECM loan volume can not be denied.
However these last few months our volume has increased over one year ago marks. We are in fact doing better. Significantly better!!
So called Government studies about foreclosure and fiscal responsibility have been exposed for the hogwash that they in fact are.
Questions about the solvency of FHA insurance funds as well as the TRUE reasons for the charges such insurance has engendered .
For example has the Government helped themselves to FHA funds as it appears to have done with GSE’s . profits ?
How then can financial advisors advise a strategy, many think is a simple government seizure at best. Both local and federal? These folk live in a perfect world, that does not exist.
What happens after 9/30/2017 is an explosion in endorsements. Baby boomers will use this program as no other. They will leave a very wide mark indeed . The last 10 years have left them in a corral that only a HECM can help them and their children escape.