When it comes to utilizing a wealth of built-up equity, homeowners have an array of options available on the market. Aside from reverse mortgages — both federally backed and proprietary — many shared equity products and sale leaseback products have popped up in recent months, each with their own features, fees, and structures. RMD gathered details for each product for a comparison snapshot.

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A new report from Harvard University’s Joint Center for Housing Studies reveals emerging trends for America’s senior population, as well as notable implications for the future of the reverse mortgage market.

The market for home equity solutions appears to be growing, based on the findings from the 2018 edition of Housing America’s Older Adults. Among the findings in the report, there are now 65 million households in the United States headed by people age 50 and older, which amounts to 55% of the nation’s households. The vast majority of those households—79%—own their homes. 

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Following a major investment in consumer research aimed at discovering ways in which Americans are approaching their preparations for retirement, Finance of America Reverse (FAR) today announced a major rebranding initiative, aimed at more broadly introducing home equity access into the prospective plans of retirees.

“There are a few reasons why the timing is right for our rebrand,” FAR president Kristen Sieffert told RMD in an email. “First, 10,000 people turn 65 every day, and all of them can benefit from resources to plan for retirement. Second, senior home equity continues to climb and reached $6.9 trillion in Q2 2018 according to the NRMLA/RiskSpan Reverse Mortgage Market Index.”

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The reverse mortgage portion of the Federal Housing Administration’s Mutual Mortgage Insurance Fund continues to drag on the overall government-backed portfolio, according to an annual actuarial review of the fund’s finances released Thursday morning.

At the end of fiscal 2018, the Home Equity Conversion Mortgage cash flow net present value, a measure reported to Congress by the Department of Housing and Urban Development and endorsed by actuarial firm Pinnacle Actuarial Resources, was estimated to be negative $13.63 billion. That’s a slight increase from a negative value of $14.5 billion estimated in fiscal year 2017, but the HECM portfolio ended this year with a negative 18.3% capital ratio, according to the report’s findings.

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With a month of experience with the Department of Housing and Urban Development’s new collateral risk assessment for reverse mortgage properties, lenders have reported a relatively smooth process in submitting appraisals to HUD and receiving responses as to whether a second appraisal is needed. And an industry working group has been studying the process, finding that roughly 20% of submissions are requiring a second appraisal. Yet explaining the process and implications to borrowers remains a challenge, originators say, and one that should be addressed upfront.

“Don’t wait until you need another appraisal until you open that door,” said John Luddy, SVP of reverse mortgage lending for Norcom Mortgage, in addressing a National Reverse Mortgage Lenders Association annual conference panel in San Diego in late October.

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Home equity release firm Figure Technologies, Inc. has announced the rollout of a new sale leaseback product to offer prospective homeowners an option to access their home equity as an alternative to a reverse mortgage.

This new offering, Figure Home Advantage, works as follows: Figure purchases the home, and grants seller(s) a lease that renews annually. Homeowners then get the proceeds from the sale in one lump sum. As the new home-owning entity, Figure covers property taxes, homeowner’s insurance, and any other costs associated with ongoing maintenance of the property.

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On the heels of a host of new equity-tapping products coming into the market, San Francisco-based peer-to-peer lending firm Prosper has announced the launch of a digital Home Equity Line of Credit (HELOC) offering to be launched in 2019.

Aiming to simplify a notoriously difficult and prolonged application process that often leads to consumer frustration, Prosper says it is attempting to respond to an increasing trend of consumers looking to access lines of credit based on increasing home values illustrated by a 2017 HELOC study conducted by TransUnion.

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