Reverse optimism, diversification, and uncertainty



The forces behind industry optimism, diversification, and economic uncertainty.

Despite political and social unrest and economic uncertainty reverse mortgage lenders are expressing optimism in both the program’s viability and growth. Additionally, some have announced to further diversify and grow their forward or traditional mortgage originations. In the next three minutes, we will examine the forces behind industry optimism, the possible motivations for increasing traditional lending, and the uncertainty that surrounds the U.S. economy this year.

One of our commenters on HECMWorld said this of industry optimism. “While 2021 may be the calendar year that ends the COVID-19 pandemic, this fiscal year is starting out to be a year of mixed messages, optimism in the face of humbling fact, and troubling issues facing our industry. No matter what one’s experience or knowledge maybe, in these times we need to be flexible and “improvise” whenever necessary.” (-The Positive Realist). A fitting comment considering the pseudonym used.

Our industry’s lenders have manifested their optimism in stepping up and effectuating significant changes in technology, sales processes, and modifying their sales and loan offerings to reach a larger pool of eligible borrowers- including those under the age of 60 or 62. Despite national stay-at-home directives and strict regional lock-downs HECM loan applications climbed significantly last year, up month-over-month in throughout the summer and fall. A testament to both growing financial uncertainty among senior homeowners and rapid adaptation to remote sales.

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1 comment

Melinda Hipp January 18, 2021 at 12:25 pm

Sometimes, when I hear that MORE Reverse lenders want to open more Forward space, I just wonder if anyone has paid attention to what has NOT been successful with companies who have tried this. Coming from years in the Forward space then transforming into only Reverse, I can tell you there are very few Loan Officers in the Forward space who want to focus or try to even attempt to originate a Reverse Mortgage. Most of those who do give up after one or two originations. If I was consulting with companies on the topic, I would suggest they focus on making life better in one space before adding any others and we are not even close to doing that on either side.. In fact, after 23 years in the industry, I would counsel younger folks to go out and get partners all around you…just like you get insurance providers, surveyors, repair folks….get a Reverse Mortgage specialist on your team. Together, you will benefit each other MUCH better than one trying to outguess the other. In fact, I have seen Forward originators take borrowers already on an FHA Reverse and refinance them to an FHA loan…to what end I ask? I would be very concerned that a Forward originator is not being able to explain the differences between the two or even between a Reverse and a cash-out product. There needs to be some attention paid to those times when these type of refinances happen to make sure that churning is not going on. To that end, a Forward LO may need to be required to get the lender involved when looking to refinance a borrower out of a Reverse. My thoughts only come from experience on both sides of the aisle and knowing hundreds of professionals who know what they are doing and hundreds who do not. Before jumping too far and too deep, maybe take some steps to be sure it will be a sustainable model.

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