In the fourth quarter of 2010, Texas overtook Florida as the state with the second-highest number of reverse mortgage endorsements. Now, some in the industry say Texas hasn’t even scratched the surface of its potential.
Several factors continue to influence this development, including population demographics and home values, says John Lunde, president of Reverse Market Insight.
California leads the nation for reverse mortgage endorsements, but a drastic decline in California’s and Florida’s endorsement rates in the past couple of years has allowed Texas the opportunity to catch up. Starting in March 2010, Texas and Florida went back and forth for about six months before Texas became the No. 2 state for reverse mortgage endorsements, thanks in part to a growing population and stable home values.
Source: Reverse Market Insight
David Cook, manager of Network Funding’s reverse mortgage division, said Texas saw 2% population growth in 2009, while also experiencing a net domestic migration of more than 143,000; as people continue to move to Texas, the number of households eligible for reverse mortgages increases.
Reverse Mortgage Insight ranks Texas third in the nation for highest senior citizen population, behind No 2. Florida, but while Florida’s home values have depreciated 39.7% in the last five years due to the recession, Cook says, Texas home values grew 9.2% over the same time span.
Scott Norman, the immediate past president of the Texas Mortgage Bankers Association, says the state has the best lending landscape in the country, especially considering its sixth-lowest foreclosure rate.
“We have not scratched the surface of where the industry will be in 10 years,” Norman says, adding that the growth rate in the 65+ age group through 2040 will be three times the overall growth rate of Texas.
In light of this, Cook says the reverse mortgage division of Network Funding has seen steady growth in business, as a majority of the company’s branches are located in Texas. Cook says they’re in the process of hiring and training more loan originators, and he expects reverse mortgages to increase dramatically in the next few months.
“As we introduce the product to more of our branches and recruit experienced originators, we hope to be at about 25 endorsements per month by the end of 2011,” said Cook. “Our goal for 2012 is steady increase to 40 per month by end of 2012.”
Through the first quarter of 2011, Lunde says, Texas is still growing slowly with 1,747 reverse mortgages endorsements, while Florida is still declining, having endorsed 1,447. Cook said Florida’s high senior population may eventually help it reclaim its number two spot once home values go back up, but for now, he expects to see a big expansion in Texas’ reverse industry.
Written by Alyssa Gerace