“The Fed will push until something breaks”. That’s been a popular line among economists and analysts according to a recent column in Fortune
Continue readingWhat happened to September HECM Endorsements?
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EPISODE #746
AAG cuts workforce- Finance of America to close forward division
A rapidly-changing market has led two of our industry’s largest lenders to make big changes. One reduces its reverse mortgage workforce, another will close its traditional/forward division and focus on its productive reverse mortgage channel.
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Finance of America Mortgage closes forward unit- reverse remains the focus
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Reverse Market Insight’s monthly market update
The California Connection to the HECM
Without audience targeting are Google Ads Dead? Think again…
Early this month Google announced new restrictions for targeting specific audiences. The restrictions apply to content related to housing, employment, credit, and those who are disproportionately affected by societal biases. The news of these restrictions created quite a stir among industry brokers and lenders who heavily rely upon targeted Google ad campaigns. All which may have you asking if these changes will kill future reverse mortgage advertising on the world’s most popular search engine. In just a moment we’ll hear from our online SEO expert Josh Johnson to find out.
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Google’s restrictions are not necessarily novel nor unexpected. It was just over two years ago Facebook faced scrutiny from federal regulators for allowing those offering credit or housing finance to restrict ad audiences by race or religion among other questionable metrics that would violate HUD’s fair housing rules. An investigation by ProPublica broke this news in October 2016. It was nearly two years later in August 2018 that HUD filed a formal complaint against the social media giant for discriminatory advertising practices. Seven months after HUD’s complaint Facebook announced sweeping changes. Both Facebook and later Google, took a blunt approach much to the chagrin of lenders and service providers.
What ad filters are going away? In its official release Google revealed, “credit products or services can no longer be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”
Is this the end of Google ads for reverse mortgages? To answer that question I reached out to Josh Johnson who heads up Reverse Focus’ Online Dominance SEO program and Google marketing. Here’s his explanation.
Here’s what makes Google unique from other platforms and why reverse mortgage Google ads will continue to reach the intended audience.
To summarize, older homeowners are intentionally seeking out reverse mortgage information on Google which means, yes-your ads will be seen by your target audience, even though you can no longer target specific age groups.
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California: The lynchpin of the HECM’s economic outlook
Since 2009 California has led all states for total HECM endorsements. In fact, according to the Fiscal Year, 2021 Independent Actuarial Review of the Mutual Mortgage Insurance Fund, California accounted for 26% of all HECM endorsements in the fiscal year 2021. Florida, Arizona, Colorado, and Texas trail significantly in endorsements accounting for 7-8% of overall loan volume respectively. California is home to some of the nation’s highest-valued homes and also has seen some of the most rapid growth in Home Price Appreciation. Consequently, any broad declines in home values in the Golden State will have a marked impact on the 2023 and 2024 economic valuation of the HECM Program.
FHA acknowledges this sensitivity in its 2021 report. “HPA is a lagging indicator that tends to overstate
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the health of the economy during good times and the weakness of the economy during bad times. Because the MMI Fund Capital Ratio is so closely tied to HPA, the assessment of FHA’s financial health represented by the ratio can change materially and quickly with changes in both actual and projected home values.” The operative word is overstated. To further illustrate this point the Mutual Mortgage Insurance Fund’s capital ratio is three times more sensitive to a one percent drop in home price appreciation than a one percent decrease in interest rates.
All of which begs the question, where does the California home market stand today? After a decade of generally consistent gains, home values have turned negative. Zillow reports that home price in Southern California is now 6% below the all-time high reached in May.
For a closer examination, we’ll go to Fortune’s interactive map which shows the markets most likely to see a drop in home prices in the coming year. Markets in dark red are very likely to see home price reductions, those in light pink are rated high, purple is medium, and light blue are the markets less likely to see home price drops. Now moving over to Shasta County California and Redding the county seat, I can see my hometown is very likely to see price drops which I can confirm first hand having seen dozens of listings drop their asking price and closings coming in 10-17% lower. However, we’re not alone with most of the southern California markets also showing a high probability of a fall in home values. Many of these at-risk markets have already seen significant erosion in home values. Between May 2022 and August Shasta county saw values fall by -2.78%, Sacramento values fell by -6.03%,
San Francisco values dropped by -7.8%, and San Jose fell over 10.5%! Los Angeles, Riverside and San Diego also saw values fall.
Looking at metros in other states we can see some of the previous hottest markets poised for a fall. For example, Boise Idaho. The median sales price of single-family homes in the greater Boise area has fallen from a high of $550,000 in May to $510,000-a drop of 8 percent. In the same time period, Reno sale prices also dropped 8% from $625,000 to $580,000. Austin Texas appears to be in a free fall collapsing from a median sales price of $720,000 in May and plummeting to $620,000- a drop of 14% in just three months! If that pace continued Austin prices would fall by 56% year-to-year. It should be noted that two forces have not been factored into this forecast which may accelerate the fall of home values; a recession and continued inflation increasing foreclosure filings.
In conclusion, we’ve been on this journey before; at least those of us who were originating prior to the 2008 housing crash. Whether it’s a coming housing crash or correction our willingness to look at market signals and acknowledge their likely outcome only serves to help us prepare for the future and adjust our mindset and business strategy to succeed. How do you expect California home values will impact reverse mortgage lending? Let us know in the comment section below.
Redfin Monthly Housing Market Data (Charts shown in video)
2021 FHA Annual Report to Congress
Odds of falling home prices in your local housing market, as told by one interactive map
Rising mortgage rates are sending home prices lower
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Experts: what homeowners should do in a softening market
Are we headed for a major market crash? Are there things to consider like reverse mortgages to help weather eroding market conditions? Several experts weigh in with their advice…
Continue readingHECM public perception, policy & property values
Part 2 of our exclusive interview with Dan Hultquist examines the impacts of public perception, policy, and property values on the HECM program.
Continue readingHurricane Ian traumatized Floridians & their home nestegg
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EPISODE #744
The CFPB wants to hear from you
The Consumer Financial Protection Bureau (Bureau or CFPB) is seeking comment from the public about (1) ways to facilitate mortgage refinances for consumers who would benefit from refinancing, especially consumers with smaller loan balances; and (2) ways to reduce risks for consumers who experience disruptions in their financial situation that could interfere with their ability to remain current on their mortgage payments. The press release refers to this solicitation as a Request for Information (RFI).
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Don’t Be Complacent During The “Critical Retirement Decision” Zone
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Hurricane Ian traumatized Floridians. It also erased their nest egg
The 6 Ps of Our Industry’s Health
Dan Hultquist shares the 6 Ps that impact the overall health of the reverse mortgage industry…Part 1/2
Continue readingA closer look at September’s HECM Endorsement data
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EPISODE #743
Moodys says these 210 housing markets could crash 25-30%
[Fortune] “Moody’s Analytics expects that U.S. home price decline to widen to between 25% to 30% in 210 “significantly overvalued” housing markets.
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Homebuilder sell-off to impact neighborhood home values
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A closer look at September’s HECM Endorsement data
September Top 100 HECM Lenders Report
As we close out fiscal year 2022 see direct retail HECM endorsement activity for the month of September 2022.
Continue readingRetirees Face the Consequences of a Manufactured Recession
These are the consequences retirees now face in the midst of a manufactured recession…
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