If there’s one thing many media outlets practice it is selective reporting of facts, willful omission, dividing Americans by race or economic class, and fear-mongering to garner clicks to increase ad revenues. Such are the criticisms that come to mind when reading USA Today’s most recent expose on reverse mortgages. Sadly such journalistic practices are not uncommon…
Watch for a round-up of this week’s top reverse mortgage news stories.
The unexpected news of the Congressional Budget Office’s report on reforming the HECM program created quite a splash among industry watchers. As the initial shock of the government watchdog’s recommendations sinks in, some are reading between the lines. One of the subtexts I missed are the political origins of the CBO report itself…
In August 2016 AARP recommended the elimination of the HECM ‘line of credit’
While FHA recent reports show a positive financial outlook for the fiscal year 2020, the CBO issued a report today proposing 4 major potential reforms to the HECM to reduce long term risks to the taxpayers. The Congressional Budget Office provides budget and economic data to Congress or the legislative branch which sets their priorities. In essence, they are the watchdog for the nation’s purse.
1-Make FHA a direct lender. Under this proposal, lenders would do the leg work or marketing and originating the loan, while FHA would make the disbursements directly to the homeowner. In addition, the government would service the loans. The CBO acknowledges significant drawbacks in scaling to manage a large number of loans…
Two months ago we asked if private reverse mortgages would stop the slide in our industry’s overall loan production with the increasing popularity of the jumbo or proprietary- this as the HECM’s volume has dropped considerably.
That question was raised again most recently in Reverse Mortgage Daily, but with a twist. One of the more interesting observations in that piece comes from the director of Cambridge Credit Counseling. Jennifer Cossentini said, “I do think there is a strong possibility that the reverse mortgage landscape that we know now will flip in the next few years. I think the proprietary products have the potential to evolve and change to fit the consumer’s needs much faster than the HECM can.”
While private lenders can be much more responsive in meeting older homeowner’s needs, presently only those in higher-valued can benefit from proprietary products.
But do private or proprietary jumbo reverse mortgages truly compete with the HECM? It’s really not a question of one loan versus the other, but rather how each may complement each other in terms of total industry volume. So where can the jumbo reverse provide relief?
This week, reverse mortgage stories from across the web…
“I hate annuities. We don’t sell annuities. I would die and go to hell before I would sell an annuity”. Those words may sound familiar If you’ve seen Ken Fisher’s television ads or heard his radio spots for Fisher Investments. Recently he penned a national column for USA Today- “Considering reverse mortgages? Better to reverse course on this risky choice”. Is Mr. Fisher an expert on reverse mortgages?
When you sit down with a potential reverse mortgage borrower, you know they didn’t invite you over for a cup of coffee. Before they clicked on your ad, picked up the phone or sent in a card there was an underlying need or concern that motivated them. The most successful originators don’t dive into how a Home Equity Conversion Mortgage works but instead ask them what they would like to accomplish. A wise approach that cuts through the minutia of the loan and isolates underlying motivations. Despite their intentions, there may be one silent objection they are not sharing- their apprehension in using home equity…
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Just where does the reverse mortgage industry stand today? Are we on the road to explosive growth, a mild recovery, or are lower loan volumes for the remainder of the year? Somewhere between extreme exuberance and pessimism lies our new reality. Since I’m going to take off my commentary hat for a moment, let us objectively review the numbers.
First consumer demand as represented by FHA case numbers issued when a borrower’s application is submitted. Overlaying FHA case number assignments for 2017 and 18 above 2018 and 19 we can see that application activity has dropped considerably. Due to the government shutdown in December 2018 the best comparisons are in the months of February through July. What is clearly seen is the real-life impact of FHA’s October 2017 reduction of principal limit factors…
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Habits are there for a reason. They bring us comfort with their predictability and yet are often the root of our frustration. Ironic? Not so much. Chalk it up to human nature, and in many cases, it’s the usual way of doing business. There’s no denying that the established market for the HECM has been fundamentally transformed. A loan that once was best-suited to the needs-based borrower that is house-rich and cash-poor has become increasingly difficult for financially-challenged homeowners to qualify for. Today we examine the habitual approaches to marketing and communication with homeowners and how some have broken free from old habits to open new doors.
Those in the habit of focusing their efforts on the needs-based borrower are most vulnerable in a contracting HECM market. Yet some are finding creative and viable strategies to attract qualified reverse mortgage borrower…
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