Lenders Make New Estimates on Financial Assessment Volume Decline

With the financial assessment just a week away, the majority of reverse mortgage lenders agree the new rules will cause production volume to decline, but the extent to which they predict volume production will decline has shifted since earlier this year.

Fifty percent of reverse mortgage industry members anticipate a volume decline of 6-20% after the financial assessment goes into effect, according to results of a recent RMD webinar poll. Fourteen percent anticipate a decline of 21-50% and 4% of respondents say volume production will decline by more than 50%.

However, 32% say the impact of the FA will be slim, reducing production volume by 5% or less. In January, 16% of industry members said production volume would take a 5% or less hit.


In addition, 50% of industry members polled April 15 say they believe the financial assessment will benefit the industry in the long-term, with 25% saying it will not benefit the industry and 24% saying they are not sure.

The industry has long been bracing for the upcoming changes, with industry members recently expressing mixed feelings about their views on The Department of Housing and Urban Development’s (HUD) decision to push back implementation from March 2 to April 27.

But industry members do agree on one thing: the financial assessment signals the start of a new era.

Written by Cassandra Dowell

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  • It seems that some of the initial overreaction to Financial Assessment has subsided, although results are not scientific and must be categorized as little more anecdotal since the sample was not limited to the same individuals who responded to the open survey RMD sponsored some months back.

    It is significant that still over 2/3rds of all respondents expect endorsements to be at least 5% lower due solely to Financial Assessment. What is missing from the survey is how long the loss will continue or is the loss in business considered permanent?

    Based on the responses, there is a high likelihood that fiscal 2016 will see the lowest total endorsements since fiscal 2005 (and perhaps earlier) despite the highest number of those over 62 ever living in the US in a single fiscal year. The last Baby Boomers will turn 62 on December 31, 2026 which will be the date that the last of the Baby Boomers born in 1946 will turn 80 years old.

    So while there is little question the growth in the senior population will result in higher endorsement levels but it is startling that the number of endorsements are less than half of what they were in fiscal 2008 when the first Baby Boomers began turning 62.

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