A few days ago I posted that Ginnie Mae is looking to begin issuing reverse mortgage securities in the near future and to touch on this subject again I recently found that Fitch Ratings has posted a report on their reversemortgage criteria which goes over at length the pluses and minuses of issuing securities of these products. I found it interesting that the largest amount of reverse mortgage originations come from Australia and the UK. In my opinion the report gave a very positive outlook on reverse mortgage securities and the whole industry in general. This was was nice to hear since the majority of press about reverse mortgages tends to be negative. Fitch even touched on the impact that the negative press and originators mis-selling of the product can have on securities as well:
The reverse mortgage market is particularly vulnerable to reputation and mis-selling risks, which may affect the enforceability of the products, ultimately depressing the portfolio cash flows. Consequently, when analysing a transaction, the agency will look closely at the lender’s origination processes as well as its compliance with its regulatory and legal obligations.
I’m hoping that most of the “negative press” will eventually end as long as the public becomes more educated about reverse mortgages. I feel recently there has been a few large publications that have done a terrible job explaining reverse mortgages to their readers and this is turning away a large amount of people that may truly need a reverse mortgage. So my next post will touch on a few of the positives that can come from utilizing a reverse mortgage to its full potential… unitl then….
Have a Great Weekend!