With the Financial Assessment less than three weeks away, lenders have been experiencing strong demand for reverse mortgage applications as borrowers rush to get loans in process before April 27.
Some lenders have been seeing an increase in application activity as far back as February, when the Financial Assessment was previously expected to take effect March 2, before the Department of Housing and Urban Development (HUD) pushed the implementation date to the end of this month.
For others, application volume has more than doubled since late last year, when further details of the FA such as guidelines for calculating life expectancy set asides (LESAs) and extenuating circumstances were clarified by HUD. And some mainstream news reports of the changes are further supporting the new demand.
“Volume as far back as 60 days ago started ticking up significantly, and it’s continued through today,” says Joe Morris, senior vice president of reverse mortgage lending at Open Mortgage.
Within the past two months, Open Mortgage has seen reverse mortgage applications rise anywhere between 35-40%, a shift Morris says may have been possibly triggered by the false start when preparing for the previous March 2 deadline.
“It’s going to be a different world after April 27th,” said Morris.
PS Financial Services saw a similar trend in heightened application activity up until the February deadline and continues to see “a lot of apps now as well,” said Phil Stevenson, principal at the Miami-based lender.
Going back to late November/early December, when lenders had a better idea of the changes that would be taking place under the Financial Assessment, PS Financial Services saw between a 130-150% increase in applications.
While some are with a sense of urgency to get loans before the April 27 deadline, Stevenson notes that he’s been seeing a surge of HECM-to-HECM refinances as well.
“We’re going back to clients and letting them know the Financial Assessment is coming and that if a reverse mortgage is something they’re considering, then they might want to look into it a little bit more,” said Stevenson.
Other lenders, who have reported slight upticks in volume, though not as much as before the original March implementation date, are turning their efforts to ongoing training preparations as April 27 draws nearer.
“We have implemented a lot of FA training and have put the process in place for our loan officers and operations staff now, even though we are not necessarily underwriting those rules yet,” said Ed O’Connor, reverse mortgage marketing and sales director at FirstBank. “That gives us quite a leg up on understanding how to deal with everything. FA is here and we are confident that it is just another learning curve for all.”
Written by Jason Oliva