Seniors’ Home Equity Grows to $6 Trillion Reverse Mortgage Opportunity

The amount of home equity being held by potential age-qualified reverse mortgage borrowers now totals more than $6 trillion, an increase of $164.9 billion in equity in the fourth quarter of 2015, according to the latest Reverse Mortgage Market Index (RMMI) from the National Reverse Mortgage Lenders Association and RiskSpan.

The increase in home equity was largely driven by an estimated $169.7 billion gain in the aggregate value of homes owned by adults aged 62 and older, though this was offset by a $4.9 billion increase in mortgage debt held by this age group.

As a result, the gains in equity pushed the NRMLA/RiskSpan RMMI to a new all-time high of 209.12 in the first quarter of 2016—up from the previous high of 203.37 at the end of 2015.381931


(Source: NRMLA/RiskSpan)

“Until recently, it seemed unthinkable that anyone would carry a mortgage into retirement, but today millions of homeowners are still making monthly payments after leaving the workforce,” said NRMLA President and CEO Peter Bell in a written statement.

While this phenomenon is not necessarily a bad thing, Bell suggests that seniors who are looking to accelerate the payoff date may want to consider using the proceeds from a reverse mortgage to satisfy their existing mortgage debt.

But there are still some misunderstandings that remain regarding mortgage debt and reverse mortgage eligibility.

“There are some misconceptions that an applicant would need to own their home ‘free and clear’ to qualify for a home equity conversion mortgage, but this is not the case,” Bell said.

Written by Jason Oliva

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  • Early fiscal 2011, several originators (including some who have passed away) over a period of days discussed how would our endorsement numbers ever turn around. The general consensus was that if seniors perceived they had equity that was growing faster than the costs accruing on a HECM, we would soon see the endorsement levels of fiscal 2007, 2008, and 2009. The trouble was that in places like California, we began seeing early signs that even perceived increases in equity along the coast was not producing the endorsement volume we had once known even there.

    So it seems much of the good information we have seen in this and similar earlier reports brings cheer but not necessarily increased endorsement volume. So let us be of good cheer now before we have to greet what some are predicting to be the worst endorsement count for any fiscal year in more than a decade.

  • It would be helpful if a link to the cited RMMI report itself could be provided in articles like this. The chart included in the article only goes through 2015 Q4.

  • $6 Trillion, that is a lot of equity and a lot of opportunities out their for all of us!

    Not only is the amount of seniors turning age 62 years of age is increasing rapidly each day but the amount of homes owned by them are as well. It is obvious that many of these seniors have a large amount of equity available!

    As Peter Bell pointed out, there are still some misunderstandings that remain regarding mortgage debt and reverse mortgage eligibility. This is where we come in to educate the public on how to leverage the reverse mortgage into a cash flow Cow!

    We all need to pound doors, put on educational workshops, reach out to the financial planners and advisors. Small banks, credit unions, attorneys, accountants and more, they are all great sources!

    We need to educated these professionals on the values of how a reverse mortgage can fit into a financial planning strategy and a restructuring of assets for a sound retirement plan!

    John A. Smaldone

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