Home Equity Levels Rise in Reverse Mortgage Hotspots

According to new data from CoreLogic, mortgage holders in the Western United States saw the greatest gains in home equity between 2015 and 2016 — a region that perhaps not coincidentally has tended to lead the nation in Home Equity Conversion Mortgage originations from month to month.

Washington state homeowners with mortgages saw an average equity gain of a $31,000 from the final quarter of 2015 to the same period in 2016, with its southern neighbor Oregon following close behind at $27,000; that’s a 10.2% and 10.3% increase, respectively. Continuing the trend, California rounded out CoreLogic’s top three dollar equity gainers with an average of $26,000 per homeowner. The East Coast doesn’t make an appearance on the list until New York at number five with $23,000, then Massachusetts in seventh place with $20,000.

According to the most recent regional data from industry tracking firm Reverse Market Insight, only two of the top 10 states by reverse mortgage endorsement saw growth in 2016 from the previous year: Colorado, which clocked a whopping 33.8% jump — and took fourth place in CoreLogic’s measure of equity growth with $24,000 — and Washington state, which turned in a more modest gain of 6.3%. On RMI’s heat map of endorsement growth trends, Colorado, Washington, and Oregon were the only three states in positive territory from 2015 to 2016.


RMI president John K. Lunde advocated caution when discussing a potential direct correlation between the numbers, noting that with a relatively small sample size, other factors are likely at play, and that the connection might not be a straight line.

“From a statistical perspective, it would be useful to say it’s one of the pieces of your equation,” Lunde said in an e-mail to RMD. “But there are other significant pieces of the equation as well.”

“It helps,” Lunde said of increasing equity values and Home Equity Conversion Mortgage origination. “But it’s not enough on its own.”

On the negative side, Delaware was the only state in CoreLogic’s analysis that saw an equity drop, with borrowers taking an average $1,000 hit between 2015 and 2016. Alaska (no change), North Dakota ($1,000 increase) and Iowa ($3,000 increase) rounded out the bottom four states for equity growth during that period.

Nationwide, CoreLogic found that 6.2% of all U.S. homes with a mortgage have negative equity,  down from a total underwater rate of 8.4% in the fourth quarter of 2015. Nevada had the highest proportion of upside-down mortgages at the end of 2016 with 13.6%, followed by Florida’s 11.6% and Illinois’s 11.1%.

Written by Alex Spanko

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  • With so much promise in Florida, one wonders what lacks? For one, how in the world is the percentage of homes underwater so atrocious when home values in other states are rising so quickly?

    All of the talk about higher home values in California hardly proved out in the years when the lending limits were so low, a Pekingese hurdled the highest with inches to spare.

    Florida has had problems and continues to have them. Those from Florida circling the nation telling others how to originate and calling other originators lazy cannot even raise endorsements in that state to a reasonable level versus those of California the 45th lowest ranking state in the percentage of senior residents to total state residents.

    There is no question Florida has senior residents. Could it be that they are among the most uneducated in HECMs in the country?

  • I can understand to a point how and why my friend The_Cynic is looking at Florida this way. However, I lived in Florida for many years and formed as well as owned two mortgage companies in Florida.

    The rise of housing values in Florida from 1970 up to 2008 were rising higher than most other states in our country. Largely because of such an influx of people and seniors into the state. Florida was booming and so were housing prices!

    When the crash of 2008 occurred, it was the largest economic and housing crash since the great depression. Florida was one of the worst states that got hit with the housing value plunge. Home values dropped as much as 50 and 60% in value. Many, many homes with reverse mortgages on them had balances greater than the value of their home, and a lot of homes are still underwater with HECM’s on them.

    The positive side in Florida is that housing values have risen, just not enough yet to come back to such a hit it took in 2008. If you look at Florida’s statistics on rising prices, they are holding their own in the race.

    As far as the seniors in Florida having the most uneducated seniors where HECM’s are concerned, no, that is not the case. These seniors came from all over the country that moved to Florida, for many reasons, weather being the main reason. They just got hit the hardest by one heck of an economical crash, the worst many of us can remember in our life times!

    I don’t live in Florida anymore, we live in Tennessee and love it here but I know Florida and its economic conditions well. It has a way to go but it will return. I don’t know about Floridians circling the nation telling others how to originate loans and calling other originators lazy. However, if that is in fact the case, they are wrong in doing so!

    Time will tell about how fast Florida will get over its heavy housing hit of 2008 and I guess time will tell how we fair out as a nation overall. I am very optimistic about the future of our great nation and I am proud to be an American like I know my friend The_Cynic is and everyone else reading my comment!

    John A. Smaldone

    • John,

      Your presentation is great but now after the mortgage bust even more seniors are moving into Florida due to its relatively low home values. So why isn’t H4P thriving there?

      California had one of the worst problems in the nation. 60 Minutes coined the city of Stockton, the foreclosure capital of the US. They dedicated two different segments focused primarily on Stockton. Stockton is just southwest of Lodi (of Credence Clearwater Rival fame). It is just east of San Francisco but a considerable commute from it.

      When Forbes focused in on Stockton, it documented declines of 67% on new tracks of homes. 60 Minutes used a realtor’s map of homes for sale in Stockton before and after the crash. Before the crash there were some dots on the map. In 2010, the map was underneath over lapping dots. A Realtor took them on street after street where he knew the homes were abandoned by the condition of the lawns. He estimated 75% of the homes were abandoned.

      This is but one example of the problems in areas of California. The Inland Empire, a large population base in Southern California, particularly the San Moreno valley was much the same.

      There is no question that much of Florida was also hit hard, Several regions in California are still recovering as well. Our difference is our lonely coastline (we are not a peninsula like Florida) meaning few homes have ocean (or Gulf) views.

      We have never had much increase in California in the last half century from seniors moving into California. In fact we have a net loss in senior migration annually.

      If education is the crux for seniors seeing how a HECM will meet their need, then seniors now in Florida who moved into the state after the mortgage bust but did not get a HECM on that move are under educated by industry standards. It is these seniors and those who are not underwater who could potentially use a HECM. It is no different in California except we lack seniors to any extent moving into our state.

      With all of the education on H4P done in Florida alone, why aren’t Florida Realtors using H4Ps to generate huge new and existing home sale numbers? The conflicting rationale boggles the mind.

      • The_Cynic, your questions are good ones. Many of the reverse mortgage originators are not pushing the H4P product like they should be to the real-estate industry. In fact, many of them don’t know how to do it!

        Another reason is that a lot of the purchasing by seniors lately has been in the second home and vacation home market. This is why you are seeing the condo market rising like it is down there.

        I am sure there are many other reasons but these are a couple to ponder on.

        I do appreciate your reply back to me my friend, make it a good one.


      • John,

        Can you share what the source of your data is? You would think that these part-time Floridians would pick up on HECMs through just their connection of being at some point during the year in Florida (through neighbors, TV ads, mailers, etc.), and based on that put one on their principal residence in their home state to free up at least some of the cash that they invested in their Florida vacation/second home.

        I went to the HUD HECM Snapshot report and discovered some interesting things about the company of the most prominent Floridian mortgage broker (at least in this very small industry) to travel the country telling originators that they are too lazy to be successful at H4P.

        First in calendar 2016, the company only had 23 endorsements for the entire year (or less than 2 per month). Five of those endorsements were H4P, two were Refinances, and sixteen were Traditionals. The average Maximum Claim Amount on the H4Ps was $227,919, only $167,500 for Refis but $304,219 for Traditionals.

        This H4P spokesperson has stated over and over again how originators found that H4P MCAs were the highest average of their endorsements While that might be true for some, it definitely was not true for this Florida mortgage broker.

        Why the MCA was such a big deal for H4Ps was that the broker claimed that they would be the least likely to default on property charge payments because their average MCA showed they had on average about $100,000 more value in their homes than the collateral on other kinds of HECMs. Worse, three of the five H4Ps his company originated had MCAs of less than $150,000.

        Of course the report does not provide any info on the related income of the borrower but it is hard to imagine on average it would be higher on his H4P borrowers than on his Traditional borrowers.

        So after operations of a few years in his new company, it seems the Floridian mortgage broker is claiming one thing about H4P while his own business is showing another. Unfortunately not exactly something new.

      • John,

        It is odd with all of the HECM originators that claim to be H4P experts that we do not see more videos showing 1) role playing H4P sales presentations along with 2) theory and practice training. If they were divided into one hour segments, originators could work them into their work day.

        When it comes to H4P, why not take a team approach? Taking turns leaving off rate sheets and other pertinent information may be one way to avoid the drudgery of such visits. Split the costs of refreshments for presentations at sales meetings and the commissions earned on related sales.

        It is time to move away from blaming our peers and testing different approaches. This is where marketing and sales management should be actively doing by way of example, not just preaching. If upper management is not extending itself to bring in originations from the existing home sales market, we will continue seeing the results we are today, maybe worse.

        H4P endorsements are NOT on the rise. Builders and the Realtors who work with builders seem to realize the value of H4P long before Realtors who specialize in the existing home sales market.

        It is time to incorporate new ways to introduce HECMs to Realtors working the existing home sales market. Most sales executives can talk a good line about the best techniques but practicum from experience is rare.

        H4P endorsements should not be falling but they are. The industry can do better but not without significant effort at the sales management level. Commitment to change does not come from the bottom no matter how much the bottom is told to do something. The change has to come from the top and the sooner the better.

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