Credit Unions (CUs) are sticking with reverse mortgages, despite the economic and housing crisis that has negatively affected the industry, says a Credit Union Times article. CU executives say they need to continue to make the product available to their customers who need it.
The downturn in the industry, which can be partially attributed to the rules and fees associated with originating a loan, has led some CUs and Credit Union Service Organizations (CUSOs), like ENT Federal Credit Union, to move away from the product, says the CU Times, but more often they are maintaining the offering.
“Reverse mortgages remain a very important product for senior members,” Lonnie Burkholder, vice president of mortgage division at Air Academy Federal Credit Union, told the Credit Union Times. “They offer seniors a degree of financial stability and a way of supplementing their retirement income that they would not otherwise have.”
He adds that while the product may not be for everyone, seniors can trust that their CUs won’t steer them the wrong way.
There’s a big misconception that reverse mortgages are risky products, says Tom Walker, CEO of a Tampa, Fla.-based investment CUSO, Members Trust. In actuality, since the loans are insured by the Federal Housing Administration, they are very strong, he counters, calling reverse mortgages a “very good product for credit unions.”
“From an asset-liability management standpoint, these loans are some of the best products available,” says Walker, adding that the interest rate spread on the loans is also good for the CU. “The bottom line is that these are good products that senior members of credit unions need. CUs need to offer them.”
Read the full article here.
Written by Alyssa Gerace