Despite an expected downturn in reverse mortgage volume for 2010, Torrey Larsen, President of Security One Lending remains very bullish on the long term prospects for the reverse mortgage industry. “I see three macro trends that I believe will create an increasing awareness and use of Reverse Mortgage products,” said Larsen.
First he said that there are over 80 million boomers entering their retirement years who will increasingly need sources of income streams. Secondly, the recent recession has resulted in a significant decline in their retirement portfolios and they are looking for alternative sources of capital to help alleviate their financial crunch said Larsen.
“The third trend that will develop is the increased liquidity for privately labeled HMBS securities as investors seek alternative income derived products without the negative convexity that traditional MBS hold. This liquidity will enhance product development efforts and increase the product’s reach to borrowers that may not fit the current FHA HECM Borrower Profile,” said Larsen.
He added, “I am also encouraged by the Obama Administration requesting a $250 million in credit subsidy for the FHA’s reverse mortgage program along with a contingency appropriation to meet all program demand, even if demand exceeds projections.”
Overall, he expects to see industry volume drop 20% during 2010.