The reverse mortgage industry reached a milestone last month as the number of Home Equity Conversion Mortgages insured by the Federal Housing Administration surpassed one million loans since the birth of the HECM program.
FHA endorsed 3,919 reverse mortgages in October 2016, bringing the total number of HECMs issued throughout the 27-year history of the HECM program to 1,002,679 loans, according to recent data published by the National Reverse Mortgage Lenders Association (NRMLA).
“As an industry, we are proud to offer a financial product that helps older adults supplement their retirement funds while living in their own homes,” said Peter Bell, NRMLA president and CEO, in a press release. “We are grateful to the U.S. Department of Housing and Urban Development, and especially to the work of the late Ed Szymanoski, for modeling the original pilot program that made the HECM program possible.”
The benchmark of one million HECMs arrives following one of the lowest fiscal years for reverse mortgage volume seen by HUD in more than a decade. Fiscal Year 2016 finished with 48,902 loans, down nearly 16% from FY 2015. The most recent fiscal year where HECM volume fell under 50,000 units was in FY 2005, which reported 43,131 loans.
October marks the first month of Fiscal Year 2017 for the Department of Housing and Urban Development. Despite volume coming in just under 4,000 loans to start the new fiscal year, the milestone was cause for celebration among reverse mortgage industry leaders, who praised the developments of the HECM program and the one million borrowers served by it.
“To be part of an industry that has helped insure one million reverse mortgages to meet the financial needs of older homeowners is a significant and meaningful milestone,” Reza Jahangiri, CEO of American Advisors Group, told RMD. “With an increase in life expectancy and the current landscape of liquidity for many seniors, we expect to see greater numbers of people tapping into home equity for retirement planning purposes.”
“The entire industry has really come together over the last few years and leveraged its expertise in reverse mortgages to advocate for changes that have significantly improved the product and greatly reduced the upfront cost,” said David Peskin, president of Reverse Mortgage Funding LLC. “As such, we have seen a strong uptick in customer interest and the frequency in which reverse mortgages are being incorporated into older Americans’ retirement plans.”
Peskin also pointed to increased recognition among financial advisors, home builders and residential real estate professionals, who have started to realize the importance of reverse mortgages for their clients.
“We are very pleased that the industry has surpassed the one million mark in reverse mortgages issued and are excited by the impact this product has had on helping people ages 62 and older live comfortably in retirement, in their own homes,” he added. “We look forward to continue building on this positive momentum going forward.”
Written by Jason Oliva