Cherry Creek Finds Reverse Mortgage Boom in Small Town—But How?

Although national trends for home equity conversion mortgages (HECMs) are looking somewhat dismal, the city of Saint George, Utah, is bucking the trend thanks to the efforts of Cherry Creek Mortgage’s 1st Reverse Mortgage USA division, reports Reverse Market Insight’s HECM Trends newsletter.

Saint George has more than doubled total maximum claim dollars so far this year, and with 100 loans through October, it’s also on track to break its previous 2007 record of 104. In comparison, there were 62 loans in the city through October 2010, en route to a yearly total of 83.

The city “caught [RMI’s] eye as it rose to the top of our listing of cities by MCA growth, finally taking the crown from Philadelphia,” says RMI. “Our first guess was that this might be another refinance driven surge as we saw in Baltimore and Philadelphia, but there hasn’t been a single HECM to HECM refinance yet in 2011 for the city.”

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This prompted the market analysts to look into the area’s lenders, and “hit the jackpot” with Cherry Creek Mortgage, which has “created substantial business in Saint George as a new industry participant, in a place where the rest of the industry put together is essentially following the national volume trend.”

At 6.35%, the area’s penetration rate  as of October 2011 falls below that of a top-ten city’s high of 17.9%, but it’s still more than double the national average of 2.49%, according to RMI data, and much of that is thanks to the reverse mortgage lender’s efforts.

Reasons for Cherry Creek’s success could include its ability to take advantage of “niche opportunities” that haven’t yet been understood or harnessed by existing competitors, and single companies with innovative approaches can change the shape of the industry in a city, state, or even nationally, says RMI.

“Our industry is well served by new competitors that thoughtfully pursue new strategies,” the newsletter reads.

Saint George ranks first geographically for total maximum claim amount (MCA) with $30,926, a $15,760 growth, beating out Philadelphia’s $14,416 growth.

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Source: Reverse Market Insight, HECM Trends in October 2011

HECM volume trends on a state basis were split, with five of the top ten states trending downward, and three of those declining more than 20%, including #3 Florida. Fifth-ranked Pennsylvania and #9 North Carolina both saw double-digit gains, however, at 22% and 26.6%, respectively.

Top-ten cities Baltimore, Chicago, and Miami all saw dramatic endorsement drops of more than 40%, and #1 Philadelphia had the only significant gain, with a 24% increase.

Check out Reverse Market Insight’s HECM Trends newsletter here.

Written by Alyssa Gerace

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