A Catch-22

ePath 100K RM leads

Reduced profits squeeze marketing dollars

The fact that our industry generated over 20,000 FHA case numbers in September proves our ability to engage homeowners and influence them to take action. Requests for HECM counseling sessions jumped by 62% in the months leading up to October 2nd reforms. However, the question many are grappling with is if strong consumer demand will return once the HECMs continual overhauls cease and we achieve some sense of equilibrium.

With reverse mortgage originators making less per funded loan some are curtailing their investment in marketing and lead purchases- both which contribute to fewer loans. The result is a self-fulfilling prophecy. Fewer purchased leads equal fewer prospects and funded loans and therefore fewer marketing dollars.

While the present profitability per loan has declined considerably, there are a few noteworthy facts we should consider. 10 years ago HECM…

Download the video transcript here.

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John A. Smaldone February 5, 2018 at 7:31 am


You made some very good points and you are right. Now is not the time to cut back or become less aggressive, just the opposite!

Sure, October 2nd put a hit on everyone, I feel it was and is more musicological than reality.

Yes, we are seeing the effect on many borrowers we were working with. Because of the principle limit reduction factors, many of those borrowers now will not qualify, however, it is the future borrowers we need to focus on!

We have to set our sites on properties with lower loan to value ratios, higher valued properties and start reevaluating our product.

The HECM is not the last resort need based product any more. Sure, we can still help those in need but the last resort image has to be eliminated from our vocabulary.

Be aggressive, go after the professional sector such as financial planners, elder law attorneys, accountants, realtors, those professionals that deal with seniors. These seniors trust their advisers and in return when sent to you by them, they will trust you as well.

You will also find by working closely with these professionals, their clients and customers are not apt to shop the market on you!

That is my comment for the day Shannon, thank you for your advice!

John A. Smaldone

The Positive Realist February 5, 2018 at 1:43 pm

The vlog by Shannon was both strong and positive. Yet it only gave the pull forward and positive side of the situation.

The 20,405 case number assignments in September 2017 is equal to 3 months of the average monthly number of case number assignments producing the total 55,322 endorsements in fiscal year 2017, i.e., case numbers assigned between June 1, 2016 and May 31, 2017, inclusively.

Yet October 2017 only had 2,750 case number assignments and surprisingly, November 2017 only had 3,575 case number assignments per HUD. By the polar responses to origination production since November 2017, it would seem that whenever HUD decides to release the number of HECM case numbers assigned in December 2017 and January 2018, those totals will turn out to be substantially lower than the case numbers assigned in those same months 12 months earlier.

If we consider total closings a pie, then the pie is smaller after ML 2017-12. If spending more per closing to try to get to a higher strata of closings is not your cup of tea, you might try improving and increasing your reputation as a HECM specialist. You might consider taking the time now to become a CRMP. You could also write for senior or community publications on senior issues, even reverse mortgages. You also might spend time looking at ways of decreasing costs while gaining leads as John suggests.

The younger an originator is, the more time spent in gaining recognition as a reverse mortgage specialist, the more the reward over time.

If you can diversify in the current environment, that can be a good alternative and a wise investment of time if such turn downs occur in the future.. The point is the industry needs experienced originators as does the senior community we serve.


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