Reverse Mortgage Survey Results Show Decrease In Volume and Increased Competition

image A survey recently released from the National Reverse Mortgage Education Center (NRMEC), reveals that 73 percent of reverse mortgage professionals claim a decrease in the number of closed reverse mortgages.  According to NRMEC, Forty-three percent experienced a decrease as high as 50 percent or more.

“NRMEC interacts daily with reverse mortgage lenders and professionals across the country, and during the past six months there has been increasing pessimism and anxiety over today’s rapidly changing market,” Lyn R. Link, CeM, CSA, president and founder of NRMEC said.

NRMEC’s survey entitled “Reverse Mortgage Professionals: Survey of Market Conditions and Outlook” was compiled of 317 reverse mortgage professionals.  Below is more of a breakdown of the survey participants:

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    Survey respondents on average have 4 ½ years of experience originating reverse mortgages.

    Eleven percent of respondents lend 10 or more years of
    experience to this survey. Experience for respondents breaks down as follows

So what is causing the decrease in reverse mortgage production?  According to NRMEC, Sixty-one percent of respondents claimed lower property values providing less cash to senior borrowers was the top reason for a decrease in the number of reverse mortgage closings.  This is supported by the latest S&P/Case-Shiller Home Price Index that indicates national home prices have fallen by 15.4 percent in the past 12 months.

The second reason is greater competition in the marketplace, which has lead to a decrease in reverse mortgage volume.  Fifty-five percent of the survey respondents claimed competition was having a direct impact on their business.

During all of the first 19 years the FHA-insured program has been available, the industry had reached 1,001 lenders.  In just the past 7 months, 1,334 new lenders have been added.  While those numbers seem staggering, a recent report from Reverse Market Insight showed that 22.6% of the new competitors in Jul-Dec 2007 did no business just six months later in Jan-Jun 2008 and trends toward almost 50% fallout rate as they approach 1-2 years seasoning.

So while there may be a lot of new lenders trying to get into the reverse mortgage business, most have a hard time making the transition.  So what does that mean for originators who have already invested 4+ years in building their reverse mortgage business?

While you may lose a deal here or there to competition, lets remember how much more well prepared and experienced you are vs. the competition.  I do think that there are some people who have been in the business a long time and are still doing business the same way as they did when they got into the business.  As the times change you need to change your approach and adapt your marketing to meet the needs of today’s market.  So with all of that being said is there anything to look forward to? 

I think so, if you’re looking for data to support a more optimistic outlook, Fifty-five percent of the reverse mortgage professionals surveyed believe they will realize an increase in their business.  To read a full copy of the survey check out the link below.

NRMEC Survey Results 

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  • Do you think all these new lenders don’t know how to work with seniors? Do you think they are blowing good leads for the rest of us and scaring seniors because of their “forward” tactics?

  • Nope. There are many waiting for it to go into policy. Its tough for us as lenders because nobody seems to know for sure when these changes will actually happen or what the changes will be 417K, 625K or somewhere in between? Anyone that say they know is only guessing. Some say it’s going to happen Oct 1st, Nov 1st or Jan 1st. I even heard the limits would not increase because of our housing market decline. All the other items within the bill would change co-ops, purchase hecm, etc. but not the limits… only time will tell. Its a frustrating time for many reasons. Hang in there and hopefull we will learn more soon!!

  • Good day,

    What concerns me the most is the quality of the new people entering the industry. Are they the quality of people we need to be communicating with seniors. Are we going to see increases in fraud. Do many of the new people getting into the Reverse Mortgage arena understand what fiduciary responsibility means!

    This concerns me because those of us that have the right mindset and understand the Reverse Mortgage industry for what it is, will be affected by this other element. I do not know what can be done other than keep our ears to the ground and look for those that are perpetrating fraud on seniors. When we know in fact this is happening, we owe it to seniors and our industry to report them to HUD.

    Best regards,

    The Great American Philosopher

    http://www.thegreatamericanphilosopher.com

    BY: John A. Smaldone

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