A Bigger Pie – Expanding Our Marketshare

Larger Market = More Qualified & Interested Borrowers

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Reverse Mortgage News

It’s a marketshare problem. As an industry we have been negatively impacted by falling home values, cuts in lending ratios or principal limits, elimination of products and borrower qualification guidelines. In 2009 over 114,000 reverse mortgages were endorsed versus only 54,000 in 2012. Consequently we can easily point to any of these factors as the leading cause of our lack industry volume. But are we not seeing the forest through the trees? One well-respected industry leader told me “I don’t want a bigger piece of the pie but a bigger pie itself”. Otto Cushman, CEO of Liberty Home Equity Solutions was quoted in Reverse Review’s  article entitled “Extreme Summit” saying “ Less than 1% penetration, We are failing”. He backs his assertion comparing 50,000 endorsed loans in 2013 to 200,000,000 [correction made from 200,000] qualified senior households with sufficient equity equally a paltry one quarter precent of available marketshare. It’s boils down to the law of numbers. The same principle that motivates us to look at how many leads it takes to generate X amount of loans per month should be our approach to marketshare. More positively interested potential borrowers equals more loans. So where do we beign?

Reverse Mortgage News, Training & Technology at ReverseFocus.com

Market Downside = Opportunity

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Opportunities are Created in a Down Market

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Reverse Mortgage Lending Blog It’s been a double hit for many. First the elimination of the popular federally-insured Standard fixed rate product in April and this month…the elimination of all existing products for one with first year restrictions on distributions. It’s a new age in reverse mortgage lending. One where competition is down and opportunity is up for those who adjust to the new product environment. The immediate impact of product eliminations is being felt as endorsements were down 16% after the April 1st elimination of the Standard Fixed Rate. What will our numbers look like three months from now for loans closed post October 1?

 

Those impacted the most in the wake of the Standard Fixed Rate elimination are those whose business model was heavily vested in fixed rate loans. Those with more a more diverse source of loans faired better…

Smart Planning with HECM60

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Set Yourself Apart as a Reverse Mortgage Planner

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Set Yourself Apart as a Reverse Mortgage Planner

#1 Distribution limits. Your reverse mortgage borrowers with high existing mortgage balances will only be impacted by the lower Principal Limit Factors NOT the Distribution Limit. That’s right. HUD allows for those with mandatory obligations of a mortgage payoff that when combined with closing costs and required set asides to use  up to 100% of the gross principal limit. Here’s an example. Harry Homeowner qualifies for a Gross Principal Limit of $200,000 but has a mortgage payoff of $160,000, a repair set aside of $13,000 and closing costs of $5,000. That’s total mandatory obligations of $158,000 or 89% of the Principal Limit. That’s right, we broke through the 60% first year cap. #2 Cash at closing? Yes, it makes sense for those with access to funds to avoid not only the upfront 2.5% FHA Mortgage Insurance Premium but also younger borrowers who want to reduce the lifetime cost of the loan.

Good Intentions vs Original Intent

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Though Unwelcome Change was Crucial

Watch Last Week’s Video Here  |  Submit Feedback to HUD on Financial Assessment Here
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Reverse Industry Change

The Importance Of Intent In The Reverse Mortgage Industry

The saying goes “the road to hell is paved with good intentions”. The same could be said of the federally-insured reverse mortgage program’s recent predicament and HUD’s swift action to avoid disaster…the closure of the program. Much of the recent reverse mortgage news has focused on the announced overhaul of the Home Equity Conversion Mortgage Program, but few look at or understand it’s original intent. The words original intent are fitting when examine the origins of our program versus its evolution over the last 24 years. The Housing & Community Development Act which laid the groundwork for the reverse mortgage program says the purpose is “to meet the special needs of elderly homeowners by reducing the effect of the economic hardship caused by the increasing costs of meeting health, housing, and subsistence needs at a time of reduced income, through the insurance of home equity conversion mortgages to permit the conversion of a portion of accumulated home equity into liquid assets.”