Including proprietary originations,[1] the industry has completed just under an estimated 1.3 million transactions since 2006.

I estimate an average of just over 48,000 transactions per year since 2016, even including the COVID-19 refinance boom. The number of borrowers served would be a bit lower due to reverse to reverse refinancing, but let’s set that aside for a moment.

When considering the tectonic shifts in demographics and economic challenges families are navigating, we serve an almost imperceptible portion of the potential market.  To quote the title of the late Monte Rose’s book, the opportunity and responsibility to “Go Sell. GO Serve”[2]  is monumental!

Research by SP Group for HUD shows that 53% of HECM borrowers use the program to create additional income, while one-third indicated they used proceeds to pay off an existing lien. [3] Through the eyes of these consumers and/or their family members, the economic value is clear, but the qualitative benefits, such as peace of mind and stress reduction on the other hand can be more elusive to the outside observer. That said, borrower testimonials which flood into reverse mortgage loan officers bear witness to the tremendous emotional and qualitative value.  Notwithstanding the fact that like all mortgages the borrower must continue to pay homeowners insurance, real estate taxes and any HOA dues, as well as maintain the home.

To reach more of the underserved market, I propose four key levers.  Here, I’ll discuss the first two.

First, focus relentlessly on expanding distribution. We need more qualified, passionate, and purpose driven originators with a growth mindset and sufficient mortgage and business development talents. Fortunately, HECM regulatory improvements have lowered barriers to entry and coupled with a challenging traditional mortgage environment these two events have served as catalysts for IMBs to begin taking the opportunity seriously. Combined  with steadfast commitment from legacy reverse companies we are beginning to nudge distribution in a healthier direction.

Second, innovate to identify non-buyers with a high probability of adoption.  This involves following data indicating key life events and immediate needs. Let’s explore three significant examples: (1) 57 thousand (2) $50 billion (3) $600 billion.

In 2020, an estimated 57,000 applicants aged 65 and older were denied traditional cash out refinance loans or Home Equity Line of Credit (HELOC) due to Debt-to-Income Ratios (DTI)[4]. Consider how low interest rates were in 2020. Odds are strong the number declined today would be notably higher.  This number is significant compared to those served by the reverse mortgage industry in 2020. And these were homeowners already shopping for a solution.  How many could have been served via a reverse mortgage?  Moral of the story? Lenders should actively monitor declines for 55+ borrowers and inform them of alternative solutions… not kind of sort of monitor…or maybe the LO does or doesn’t…systemically…as in never fail to.

The CDC reports $50 billion is spent annually on medical costs related to older adult falls in the home, with $12 billion paid by private or out-of-pocket payers. [5] Funding some of this from housing wealth could make sense.  More importantly, preventing falls at home can reduce this cost. Companies like Bold are working to do just that by helping older adults improve physical fitness through a digital fitness platform.

See https://agebold.com/ for more information.

In the reverse mortgage industry, we are fond of citing the percentage of adults who want to age in place, but it is important to peel this onion back another layer or two.

In her article, “Aging In Place Statistics And Facts In 2024”[6] author Deb Hipp notes work published in the Delaware Journal of Public Health that 77% of adults over the age of 50 prefer to age in place. Her article does a great job of discussing why, sharing relevant facts, and the benefits.  To her credit, Hipp also raises a few salient concerns, including feelings of isolation and loneliness and pointing out the fact that most homes are simply not suitable for aging in place.  She cites a 2020 report by the U.S. Census Bureau which estimates that only 10% of American homes are “aging ready.”

Further research reported by the Bipartisan Policy Center Housing Commission, “estimates that just 3.8 percent of housing units in the United States are suitable for individuals with moderate mobility difficulties.”[7] Additionally, AARP recently cited that the Harvard University Joint Center of Housing Studies “estimates that only 1 percent of existing homes have a set of five key accessibility features: (1) a zero-step (no-step) entry, (2) single-floor living, (3) halls and doors that can accommodate a wheelchair, (4) lever-style handles, and (5) electrical controls that can be reached from a wheelchair.”[8]

So, is it 10%, 3.8%, or 1%? Again, it depends. Numbers vary based on the characteristics being measured in each study, but the risk for millions of older homeowners is indisputable …most homes are not well equipped for aging in place safely. We have an opportunity to inform homeowners and their families about the risk and help fund the purchase of a new dream retirement home or modifying the current home to make it accessible and safe.  Hat’s off to organizations like VGM Live At Home who work tirelessly every day to support a network of providers focused relentlessly on addressing accessibility challenges.  Find more at: https://www.vgm.com/communities/live-at-home/about/.

AARP reports that 40 million family caregivers provide unpaid care valued at an estimated $600 billion per year. [9]  Additionally, 78 percent of these family caregivers incur out of pocket costs, and 61 percent balance caregiving with work.  More alarming than the financial burden is the high emotional strain experienced by caregivers.

Bruce Horovitz’s AARP article reports that 50 percent of caregivers said it increased their emotional stress, and “more than one-third (37%) said it impacted their feelings of stress.”[10] For those of us who have witnessed this up close (an ever-increasing number), these facts resonate. Beyond the scope of this article but consider for a moment the downstream medical costs and loss/reduction of incomes, etc. for families. The problem is large and impacts millions.

The good news is that there is an increasing web of support beginning to take shape.  In 2022, the Administration for Community Living published a plan to support family caregivers, which identified “nearly 500 federal, state, and local actions to support family caregivers across LTSS and other settings.” [11]  And a little closer to home, it is becoming more common to see reverse mortgages being used to alleviate the burden. Families accessing housing wealth to pay for increased care or part-time care to ease at least some of the burden on family caregivers.

57 thousand, $50 billion, and $600 billion – These numbers represent personal and common human experiences. Responsibly monetizing housing wealth through reverse mortgages can play a significant role with potential economic and emotional benefits that last a lifetime. Given the scope of lives touched, a mere 48 thousand per year barely scratches the surface.

————————Citations—————————

[1] Proprietary originations make up 9.7% of the total figure in 2019 according to: https://www.housingwire.com/articles/hmda-report-includes-private-reverse-mortgage-origination-data-lenders-offer-perspective/. Full estimate derived by the author. 

[2] Monte Rose. Go Sell.(Go) Serve. Kitchen Table Mastery for the Reverse Mortgage Professional. MRBiz Publishing. Irvine, CA. 2008

[3] SP Group, LLC. U.S. Department of Housing and Urban Development, Office of Policy Development and Research. Home Equity Conversion Mortgage Program Analysis. July 2022

[4] Estimate derived from data contained in: Mortgage Denial Rates and Household Finances among Older Americans, Karan Kaul and Linna Zhu, October 2021, Housing Finance Policy Center, Urban Institute.

See LinkedIn post for data table: https://lnkd.in/gyVExG38

[5] https://brooksrehab.org/news/the-cost-of-falling/#:~:text=According%20to%20the%20CDC%2C%20about,out%2Dof%2Dpocket%20payers

[6] Deb Hipp. Aging In Place Statistics And Facts In 2024. Forbes Health. May 2, 2024. https://www.forbes.com/health/healthy-aging/aging-in-place-statistics/#:~:text=77%25%20of%20adults%20over%20the,prefer%20to%20age%20in%20place.

[7] Senior Health and Housing Task Force, Healthy Aging Begins at Home, May 2016, Bipartisan Policy Center

[8] AARP. Public Policy Institute. Aging Well in America: AARP’s Vision for a National Plan on Aging. July 2024

[9] Susan C. Reinhard, Selena Caldera, Ari Houser, and Rita B. Choula, Valuing the Invaluable 2023 Update: Strengthening Supports for Family Caregivers (Washington, DC: AARP, March 8, 2023), https://www.aarp.org/ppi/info-2015/valuing-theinvaluable-2015-update.html.

[10] Bruce Horovitz. More Than 60% Say Caregiving Increased Their Level of Stress and Worry, New AARP Report Finds. AARP November 1, 2023. https://www.aarp.org/caregiving/health/info-2023/report-caregiver-mental-health.html

[11] Administration for Community Living, “Recognize, Assist, Include, Support, & Engage (RAISE) Family Caregivers Act Advisory Council,” last modified January 18, 2024, https://acl.gov/programs/support-caregivers/raise-family caregiving-advisory-council.