IndyMac Reports Financial Freedom Production Down
March 4th, 2008 | by admin Published in Commentary, Financial Freedom, Products, Reverse Mortgage | 10 Comments
According to a recent post from The IMB Report, IndyMac reports that
reverse mortgage production from Financial Freedom was $360 million(January 2008), down 13% compared with last month and down 21% compared with last year.
My question is are these production numbers related to the recent layoffs from IndyMac or is this a sign that reverse mortgage production is slowing nationwide? I’ve had a handful of RMD readers e-mail me saying that things have been a little slow in the past month but everyone seems pretty optimistic that things will bounce back.
Thoughts?
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March 4th, 2008 at 1:12 pm (#)
I understand that volumes are lagging for many originators, but consider that Indymac has been losing marketshare over the past to years due to:
1) Poor service and lagging pricing behind competitors
2) New retail and wholesale lenders have entered the reverse space and are picking their volume off
This business is becoming increasingly fragmented due to new market entrants.
March 4th, 2008 at 4:35 pm (#)
I agree with Mr X especially with Point #2. World Alliance/LLS is out for market domination. We are with FF and have had no issues but LLS just snagged our account rep and when they are up and running in this state, I could see us signing up with them.
I would also add that the while the credit crunch has not nessecarily affected reverses (save for premiums) the news may have kept some seniors from applying worried about the lender going out of business due to the turmoil.
March 5th, 2008 at 9:02 am (#)
This is more market driven than headcount driven. I know someone at Everbank that said their RM Division is hurting … #’s are down and so are # of employees -I think employees in that division are down by half year over year.
March 5th, 2008 at 10:10 am (#)
Did we over estimate the market? The decline in property values is hurting Michigan production. We have all seen the numbers relating to the dollar amount of home equity that the baby boomers will carry into retirement. Are there any numbers showing the mortgage debt they will have in relation to home value? And the impact that a 10% drop in home values will have on our potential customer base? I am not feeling as warm and fuzzy about this market as I was a year ago. I have been in the mortgage business for over 17yrs and I can tell you that property values can drop very quickly and take a very long time to recover. And recovery will only come with housing demand, job stability and rising incomes. Not to turn this into a political speech, but $8hr service sector jobs will not drive an economy. I also believe that many of these “baby boomer” seniors will end up in foreclosure as they counted on their combined fixed income to carry their mortgage debt in retirement. As one spouse dies,and the subsequent loss off income benefits, the other will have no means to support all that debt. This could further suppress property values.
Not to sound “doom and gloom”, but I was part of the subprime mess. I remember when these products were first introduced. We thought the investors were nuts. 100%LTV, no income verification and 580 credit score, but we all turned into pigs feeding at the trough. Like the “tech bubble” in the 90’s, it was the “new math”. Everybody is complaining that the FHA insurance premium is too high. I’m concerned that it is too low. Is this program going to turn into a huge government bail out at the tax payers expense? I hope the “bean counters” that developed the subprime programs are not the same ones that developed the RM.
I also hope that the RM is still available when my wife and I turn 62. This is without a doubt the greatest consumer loan ever!
March 5th, 2008 at 10:13 am (#)
Did we over estimate the market? The decline in property values is hurting Michigan production. We have all seen the numbers relating to the dollar amount of home equity that the baby boomers will carry into retirement. Are there any numbers showing the mortgage debt they will have in relation to home value? And the impact that a 10% drop in home values will have on our potential customer base? I am not feeling as warm and fuzzy about this market as I was a year ago. I have been in the mortgage business for over 17yrs and I can tell you that property values can drop very quickly and take a very long time to recover. And recovery will only come with housing demand, job stability and rising incomes. Not to turn this into a political speech, but $8hr service sector jobs will not drive an economy. I also believe that many of these “baby boomer” seniors will end up in foreclosure as they counted on their combined fixed income to carry their mortgage debt in retirement. As one spouse dies,and the subsequent loss off income benefits, the other will have no means to support all that debt. This could further suppress property values.
Not to sound “doom and gloom”, but I was part of the subprime mess. I remember when these products were first introduced. We thought the investors were nuts. 100%LTV, no income verification and 580 credit score, but we all turned into pigs feeding at the trough. Like the “tech bubble” in the 90’s, it was the “new math”. Everybody is complaining that the FHA insurance premium is too high. I’m concerned that it is too low. Is this program going to turn into a huge government bail out at the tax payers expense? I hope the “bean counters” that developed the RM were more prudent in their calculations and assumptions.
I also hope that the RM is still available when my wife and I turn 62. This is without a doubt the greatest consumer loan ever!
March 5th, 2008 at 12:07 pm (#)
Volume is not down because of head count but head count is down because of volume. Wholesale lenders are basically fishing from the same pond of originators (with the exception of a few new producing retailers in the last year) reducing this leading wholesaler’s revenue. This is industry canibalism paired with depreciating home prices….
March 5th, 2008 at 1:51 pm (#)
I agree with what everyone has said but would add that there are demographic-related challenges we all face despite how many trillions of dollars in equity are out there.
What I mean is that I think a large population of the leading edge of the boomers still maintain somewhat of a depression-era mentality whereas they can make it through any difficulties they have by ‘hunkering down’.
So, when all they hear is bad news about the mortgage industry it’s just one other reason to stay low. Certainly the drop in home prices (and subsequent RM loan value) has an impact as well.
The ones writing RMs today are either savvy enough to realize the value of it or are in dire need.
But this down-side will gradually change and I would expect us to all being very busy over the next decade and for decades to follow. There are simply too many economic pressures at work in my mind.
If we keep-on keepin-on with educating the population with facts then this will only serve us all for the better when the tide turns back around and will help keep us afloat until that happens.
March 5th, 2008 at 2:03 pm (#)
Did you see this?
New estimate: Retirees need $225K for medical bills
http://blogs.usatoday.com/ondeadline/2008/03/new-estimate-re.html
March 5th, 2008 at 11:20 pm (#)
I would have to agree with one of the first posts that pointed out that other companies are taking over from FF. They were the pioneers and industry giants but are being left in the dust. I’m beginning to work with LLS, and I have to say so far I’m pretty impressed. We’ll see how it goes once my loans start funding there….
March 16th, 2008 at 9:02 pm (#)
It is a combination of forces that account for lower volume for FF. It all began when Michael Perry took over FF. He was handed the New England Patriots of the Retail Sales force for Reverse Mortgages. He arguably had the best retail RMS’s in the industry, an extensive processing facility, servicing, and some of the best minds in reverse mortgages, at that time. In the end, experienced caring, top producing RMS’s left in droves and the culture deteriorated to the point that many other smart executives left FF also. Top producing RMS’s are difficult to find and it takes years for them to develop into top producers. Without them, it will take some time for FF to re-stock enough talent to re-coup sales. That is why their retail numbers have declined.
Regarding wholesale, previous comments about poor processing, lack of innovative product and increased competition are real issues for FF. Now brokers have choices and FF must compete for the business.
The second biggest issue is that the industry is no longer doubling or increasing at a 50%/year rate anymore. Although business is still growing, the problem is that competition has quadrupled. Banks are increasing sales forces, B of A has entered the business in a big way, and many mortgage brokers are trying to gain competency in the business. All these competitors have taken market share from existing players. Decreasing market share for the existing players is why they feel business is down.
The largest problem, is all the bad news seniors read about everyday. The sub-prime bad news, economic bad news, the declining home value bad news, sprinkled in with the occasional news story blaming reverse mortgages for an improper financial product being sold to a senior; all hurt the industry. Every time a piece of bad news is published, another segment of seniors that could really use a reverse mortgage are scared back into indecision.