After a challenging fiscal year in 2010, attendees at last week’s Annual Meeting of the National Reverse Mortgage Lenders Association still seemed upbeat about the future of their companies and industry. It helped to hear Jeff Lewis, senior managing director, Guggenheim Partners; and chairman of the board of Generation Mortgage Company, predict a 25 percent increase in reverse mortgage originations next year.
“We did 80,000 last year,” Lewis told a general session audience. “This is a great product,” he went on, “and I think we’ll do over 100,000 next year.” Discussing the new HECM Saver product, Lewis noted that “it isn’t just to replace a loan that is fixed. It’s a way to grow the market [and] bring in people who aren’t just running out of money.”
FHA designed HECM Saver as a second initial mortgage insurance premium (MIP) option for the purpose of lowering upfront loan closing costs, for mortgagors who want to borrow a smaller amount than what would be available with a HECM Standard.
David Peskin, former chairman of Guardian First Funding in Melville, N.Y., echoed Lewis’ optimism, but with a caution. “In general, it’s still a good market but with home values down, it’s a problem. In the past,” said Peskin, “you could originate six out of the 10 loans” you talked to people about. “Now, we’re down to three or four.
The customer base is there but home values don’t support the loan they want,” he explained. “The principal limit factor reduction didn’t help either. Although, front-end fee reductions and removal of servicing set-aside offsets helped, “they were not enough,” laments Peskin. “We’re working harder to get same amount of loans as used to.”
Written by Neil Morse