‘Unfrozen’ LIBOR rate hits historic low- Exclusive interview with Dan Hultquist

Dan Hultquist explains why the 10-year LIBOR rate was frozen and how lenders and originators can best prepare

This week we interview Dan Hultquist with Understanding Reverse. Dan explains what happened behind the scenes in the Intercontinental Exchange (ICE) that prevented a 10-year LIBOR swap rate from being published, what this week’s rates are, and how lenders and borrowers can benefit.



Gil Armendariz May 25, 2020 at 10:32 am

GREAT Informative Interview, How Do I Get a Link that i can use as an attachment?

Shannon Hicks May 26, 2020 at 8:59 am

Gil- are you looking for a link to the video interview?

Nancy Armour May 26, 2020 at 3:59 am

Excellent information! Dan is so knowledgeable and a great resource for all of us in this industry.

James E. Veale, CPA, MBT May 26, 2020 at 11:10 am

Great upbeat interview.

But now let us come back to reality. In the first six months of fiscal 2020, total HECM endorsements are up a whomping 20.5%. Of course, if that growth rate holds true through the end of this fiscal year, HECM endorsements would total just 37,685 for this fiscal year, putting us 10,674 (or 22%) behind where we were in fiscal 2018 at 48,359 HECM endorsements!! AND that is after a forecasted 20.5% increase for this fiscal year.

Now let us dig into the numbers. The growth in total HECM endorsements for the first six months of fiscal 2020 is just 3,196. When the industry only produced 15,616 total HECM endorsements in the first six months of fiscal 2019, total HECM endorsements of 18.812 is a huge increase.

Yet of that 3,196 increase, just 896 HECM endorsements come from either H4Ps or HECM Traditionals. 72% of the increase comes just from HECM refis. If the HECM refi increase is eliminated from the actual increase, the increase in total HECMs for the first six months of fiscal 2020 would be just 5.7%. How long will this latest wave of HECM refis last? Will HECM refis carry us back to 48,359 HECM endorsements in this and the next two fiscal years?

H4P had an increase of just 99 HECM endorsements (for 3.1% of the 3,196 total HECM endorsement increase) for the first six months of fiscal 2020. The increase in the Traditional HECM was just 797 HECM endorsements or just 24.9% of the total 3,196 increase. If we were totally dependent on just H4Ps and Traditional HECMs for growth it would take almost eight years to grow to 48,359 HECM endorsements (again the total HECM endorsements for fiscal 2018) at a consistent growth rate of 5.7%.

So as of today, the most significant growth in HECM endorsements comes from the most volatile source, HECM refis. Unless the growth rate for HECM refis of 217% is a realistic long-term growth rate (725 HECM endorsements for the first six months of fiscal 2019 and 3,025 HECM endorsements for the same time period in fiscal 2020), the current situation points to a lackluster growth in HECM endorsements for some time to come.

So where is the increase from the “massive” number of referrals coming from the financial adviser community that we hear so much of? No one is going to be so imprudent as to claim that they are the HECM refi endorsements? The numbers show the puff that is contained in so many claims made by industry participants, particularly by those who claim to be optimistic.

Michael Friedman May 28, 2020 at 5:42 am

Dan, Shannon,
Great dialogue. With HELOCs and cash-out products trickling away, the HECM is the best possible solution for so many older adults. And yes, a great time to be 62 or older.


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