HECMS: A Risky Proposition?

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Ken Fisher (‘the I hate annuities” guy) says reverse mortgages are a risky proposition. What about seniors with little retirement savings?

“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?

What they’re not telling you

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HECM originators: the silent objection for many older homeowners is using up their home equity

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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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Truth in Numbers

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An honest assessment of HECM loan volumes & consumer demand

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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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Old Habits Won’t Open New Doors

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Top producers have broken free from the old way of doing business

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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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Examining the HECM’s Viablity

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Truth be told, the HECM is not the only loan that is dependent on the government

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The United States is in the mortgage business and in a big way. I have had to repeatedly remind myself that Uncle Sam’s reach in mortgage lending goes far beyond Home Equity Conversion Mortgages. At times many reverse mortgage professionals may lament our industry’s near total dependence on the federal government when in reality the majority of the housing market is regulated and ultimately backed by the taxpayer. The HECM is no exception.

This point should not be overlooked when considering the recent news that President Trump issued a memoranda instructing the Department of Housing and Urban Development to report back on the financial viability of the HECM program. A proposition that has caused considerable concern. It’s not a shocking development being mindful the program has generated significant claims since being moved to FHA’s Mutual Mortgage Insurance fund in 2009. Subsequently, FHA officials have wrestled with just how to stop the continuous stream of…

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AMC offers no-charge 2nd HECM appraisal if required

myamc.com press release

MyAMC, LLC Offers Exclusive Program for Reverse Mortgage Appraisals

Company Extends a New Offering to Mitigate Costs to Seniors and Lenders.

DALLAS, April 2, 2019 — MyAMC, LLC, a nationwide valuation services provider, announced today a unique program offering a second appraisal at no additional cost to the Borrower if the first does not pass the Federal Housing Administration’s collateral assessment.   The new offer arrives on the heels of the latest policy changes enacted by the FHA to require a second appraisal when the first appraisal does not meet their initial requirements.  This has created a challenge within the industry, often forcing the Borrower to pay for the cost of the second valuation or, for the lender to absorb the cost or otherwise lose the transaction.  Recognizing this as a burden to the seniors that reverse mortgages are designed to help, MyAMC is determined to stand behind the quality of its appraisals and offer this program as a solution to the industry and their customers.

Since 2004, MyAMC has offered high-quality residential valuation services nationwide servicing mortgage origination channels such as banks, credit unions, wholesalers and brokers.  Additionally, the company offers post-closing quality control and compliance audit services to a broad range of lenders and their investors.  “Having previously worked in the reverse mortgage industry, we are aware of the benefits but also the on-going challenges of delivering such a product as a potential retirement solution”, said Sean Bobbitt, Managing Director of MyAMC.  “We have decided to offer a program that we feel will benefit both seniors and the financial professionals providing this service”.

MyAMC is dedicated in continuing to provide the highest quality valuation services compliant with investor, state, and federal requirements.  The new program is available immediately.  For additional information, contact Kim Wagoner kim.wagoner@myamc.com at (214) 572-2537 or visit www.myamc.com.

myamc.com press release

March Top 100 HECM Lenders

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The carry-over endorsements from January’s government shutdown have worked themselves through the system. This month’s endorsements show a 65% pull through from November’s HECM case number assignments.

 

 

 

This report was compiled from data courtesy of Reverse Market Insight.
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Trump to HUD: Examine Viability of HECM Program

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The HECM tops the list of Trump Administration’s HUD reforms

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President Trump has directed HUD to examine the ‘viability’ of the Home Equity Conversion Mortgage and to take other steps to strengthen FHA and the housing GSE’s Fannie Mae & Freddie Mac…

The Bank of Mom & Dad

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Reverse Mortgages & parental down payment assistance

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It’s both a demographic and social phenomena. More parents are supporting their adult children, in many instances keeping them financially afloat according to a recent article in The Financial Brand. Many reverse mortgage originators have seen their borrowers use a portion of their loan proceeds to help pay for college or bail out their children from financial peril. That trend is expected to increase for parents of Millennials. The question is are today’s baby boomers selling out their own retirement to help their children?

A Radically Different Approach

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A unique approach to loan risk management

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The concept of the reverse mortgage is not merely an American phenomena. China, India, the United Kingdom, and Hong Kong all have their own unique reverse mortgage programs to help their older populations age in place. However, one country has a unique and intriguing approach to managing risks to its program.

The Hong Kong Mortgage Corporation Limited offers the Reverse Mortgage Programme. One of the most interesting options offered is the ability of the homeowner to assign their life…