Unlike the early '90s, when most HECM borrowers owned their homes free and clear and were seeking an income supplement, today's inquiries come from homeowners who wish to eliminate the burden of a mortgage payment by refinancing with a HECM. We find the majority of those who call us (and they probably called and will call other originators as well) seeking a HECM cannot qualify because the existing mortgages on their homes are too large, relative to the current market value.

In early 2008, we began to accumulate a list of prospective borrowers who would have qualified for a HECM to refinance their mortgage had the single national limit for HECMs of $417,000 been implemented within a reasonable amount of time after it first had been passed by one of the houses of Congress. By the time the limit finally was put into effect later that year, we had to tell more than 150 prospective customers we no longer were able to assist them because the value of their homes had fallen.

I do not foresee as significant increase in HECM origination volume until the housing market begins to recover. Once this happens, higher expected interest rates probably will begin to affect the PLF as well.

In the meanwhile, the large, direct lenders (mostly owned by depository institutions) will increase and consolidate their market share at the expense of smaller, less well-capitalized lenders and brokers. This is partly the result of recent legislation and regulatory changes meant to benefit the consumer. Let's see how much the consumer will benefit once competition and consumer choices have been eliminated.