To the reverse mortgage survivors go the spoils

If we could really see into the future, we’d all be filthy rich – not to mention happier and healthier – the result of always having winning lottery tickets and avoiding every failing that might come our way. But unable to truly know what lies ahead, we do the next best thing: guess.

Reverse mortgage practitioners are doing just that for 2010 and what the new year will bring to their small part of the housing finance world.

One of those, prolific in his comments but shy about being identified, sees opportunity ahead – at least for those still in business. “As many originators leave reverse mortgages, those that remain stand to benefit increasing their market share,” he says. “This means despite falling home values and rising interest rates, hard-working, professional originators should be able to not only survive 2010, but make modest gains in market share and overall loan originations.”

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One fly in the ointment could be increased federal regulation. “An amendment to the Consumer Financial Protection Agency will lead to additional regulations for the origination of reverse mortgages, within one year of the creation of the agency,” this originator believes. The good news? “States may not feel as aggressive in creating more state regulations that duplicate or add another layer to existing federal regulations.”

There will be more adjustable rate HECMS, according to our veiled commentator. “As interest rates rise, the initial and actual interest rate will rise for the fixed-rate HECM. This means the gross cash benefit will be less with the fixed product once the fixed-rate exceeds the current ‘expected’ rate of the adjustable products.” (As an aside, Bank of America released a fixed-rate product last summer. Up to that point, all its originations were adjustable-rate products.)

Underpinning all reverse mortgage products will be home values, which this originator says, “have been artificially inflated by stimulus plans and tax credits. Look for some stabilization by the end of 2011,” he predicts.

Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade. He can be reached atnmorse@reversemortgagedaily.com

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  • spoils?!?!?! there's gonna be spoils?!?!?! If I can hang in for another year, I'll be rewarded?!?!?! LOL. The reverse mortgage sky called, left a voice mail that said it will be falling soon. Best of luck.

  • Critic living up to his name…

    flaguy going overboard. Neil's title to the article was probably a little bit “tongue in cheek”…might be a bit of an overstatement that the sky is falling…

    • ReverseGuy,

      I resemble that statement.

      When Senator Chris Dodd is readdressing the bill without the “super” regulator how is this person's remarks relevant? Just a whole lot of opinion without any substance. It was like last week when we were told that the Democrats had a 2/3 veto proof majority in the Senate. Why the Democrats in the Senate would need that was interesting but it also means that seven Republicans were actually closet Democrats.

      It seems you prefer opinion over realit which is perfectly fine but don't be surprised if a critic speaks up now and again.

  • This is crazy, “housing values inflated by stimulus”
    With the FHA requiiring appraisers to state how they have taken into account declining market values, and the appraisers insisting that short sales and foreclosures are the market! This means a continuing downward spiral of values in most locals.Oh, did I mention that FHA wants to make up their losses on the backs of today's borrowers?
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  • overboard would be ignoring what is going on out there on the street. 50 -70 % of the originators will be gone in the next 90-180 days. Quote it, post it, make a bumper sticker – it's the reality of the day, to ignore it is to be 'ignorANT'!

    • Hey Kevin,

      You are closer to originators nationally than many of us. Is this your expectation for all lenders in all areas of the country?

      I wonder what percentages over the same time period, Shannon Hicks and Sam Collins are looking at? While it would be sad to see so many leaving our little industry, in one way it will bring some relief and that is in eking out a living.

      • I do. The overall application volume is down, the average loans per originator is at the “barely able to feed the family” status. I think that the next 3 months app numbers will tell the tale. I just got off the phone with another career reverse originator, 5 years + in the biz, looking at other opportunities in other fields. Not even willing to hang in part time. This post title could have been simplified to “the strong and able will survive” I'm not so sure about 'spoils'!

      • In the last few weeks I have had two brokers calling saying they want to sell. I have one loan officer who started in the business before I did who has closed one loan in six months. A broker I know, who did over 300 loans with one loan officer a few years ago, is now averaging about one HECM per month.

        Things are tough. With no support from this Administration, it will only get worse in the near term. While I think your percentages may be high, there is no doubt it is a time of reduction.

  • In the last few weeks I have had two brokers calling saying they want to sell. I have one loan officer who started in the business before I did who has closed one loan in six months. A broker I know, who did over 300 loans with one loan officer a few years ago, is now averaging about one HECM per month.

    Things are tough. With no support from this Administration, it will only get worse in the near term. While I think your percentages may be high, there is no doubt it is a time of reduction.

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