The Evolution of Reverse Mortgages

NewImage.jpgFalling property values, rising business costs, fraud and greater regulatory scrutiny are among the biggest changes affecting reverse mortgages today according to an op-ed article from Bob Yeary, CEO of Reverse Mortgage Solutions.

Where does that leave the reverse mortgage market? Clearly, the business is changing. Yet it can also be rewarding for those who are up to the challenge according to Yeary.

In addition to the social benefit, the fundamental financial logic behind future growth in the reverse mortgage business remains convincing. Currently, there are 34 million Americans aged 65 or older. By 2030, that number is expected to more than double, to 71 million, or 21% of the population. Moreover, there are presently more than 12 million seniors in the U.S. who own their homes free and clear, owning an estimated $4 trillion in equity. That is a lot of collateral to be tapped. What’s more, the industry has achieved only 2% market penetration.

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So, there’s clearly a lot of room to improve, but for whom and how? The reverse mortgage business is still largely a “cottage” industry, with exceptions like Bank of America and Wells Fargo, and other big lenders are also starting to take notice. For example, Quicken Loans recently moved into reverse mortgages through One Reverse Mortgage, an existing company it acquired and retooled.

Read the rest at the link below.

The Continued Evolution Of Reverse Mortgages

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  • Not only is the article out of date, it was out of date when it was written. Perhaps the best advice he gives is: “Reverse mortgage originators and servicers may do well to forget some of what they know – or think they know – about the business, in order to succeed in an atmosphere of new challenges that may result in a landscape that is markedly different than the one they entered.”

  • Current reverse mortgage volume is not sufficient to sustain all of the companies and originators who currently are in the business. No firm can continue to exist on six HECMs per month unless it is a one- or two-person shop.

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