While concerns have arisen lately concerning the growing number of fixed rate versus adjustable rate reverse mortgage products taken by senior borrowers, a report from Reverse Market Insight shows several New England towns have gone against the national grain.
The latest report from Reverse Market Insight (RMI), titled “HECM Trends September 2012,” lists the top-5 metropolitan statistical areas (MSAs) with at least 100 Home Equity Conversion Mortgages (HECM) endorsed January through September. Ranked by the proportion of ARMs in relation to total HECM endorsements, four of the top five cities fall in Connecticut, Massachusetts and Rhode Island.
ARM percentages in these areas range from 59-66% of total loans, compared to the national average over the same period of 30%, according to RMI.
The majority split of ARMs in New England challenges the FHA’s concerns regarding the rising number of fixed rate reverse mortgages.
RMI notes the increasing percentage of ARMs for this region can be attributed to a domination of bank lenders as opposed to independent mortgage lenders in the area.
“For the 5 MSAs, banks were involved at a 60% higher rate than national figures. By contrast, the bottom five MSAs showed less bank origination than national average by about 50%,” said RMI President John Lunde.
Overall, reverse mortgage volumes fell 25.4% year-to-date to 40,804 units, compared to the 54,702 recorded in September 2011.
Written by Jason Oliva