The future is now for reverse mortgages, says a report from financial services firm and active HMBS trader Cantor Fitzgerald, and we are now fully in to the five phases of market growth.
In what Cantor managing director Jeff Traister calls the “Leave it to Beaver” world, all problems could be solved in 30 minutes and the future always looked bright.
That world, Traister says, is dead. But it’s not a bad thing for the HECM market.
The Cantor report notes the progression of HECMs from niche product to standard practice over the course of the product’s life. At the onset of HMBS securitization, trades were infrequent and there was little push to develop the market, it says.
As 2010 approached, Traister says, Wall Street began to take notice and set up dedicated reverse mortgage trading desks. “This caused a fundamental change in the market growth and velocity,” he says. “No longer were these dedicated desks satisfied with doing an occasional trade but now had to go out and build the market in order to justify their existence.”
Over time, more investors began looking into and buying the asset, including hedge funds, credit unions, banks, insurance companies and money managers, he says.
Now, he says, the product is ready to go global with domestic players ranging in size and foreign money managers regular trading the securities.
“It will be hard to imagine they were ever considered a niche product as reverse mortgages will trade all over the world.”
Written by Elizabeth Ecker