Reverse Mortgage Counseling Demand Rose 62% in September

Demand for reverse mortgage counseling services — a key indicator of demand for the product in general — spiked 62% between August and September, according to new data from Ibis Software Corporation.

Followers of the Home Equity Conversion Mortgage industry had predicted a spike in demand after the August 29 release of Mortgagee Letter 2017-12, which announced new principal limit factors (PLFs) and changes to mortgage insurance premiums set to take effect on October 2. With just about five weeks for potential borrowers to lock in existing PLFs, the industry braced itself for rising demand. And now the numbers bear that out.

The Alameda, Calif.-based Ibis logged 17,059 clients in its RMA software during the month of September, a gain of 48% from the previous month’s total. That also works out to a 62% gain in demand on business days alone.

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“September was a record month by far,” Ibis CEO Jerry Wagner said in an e-mail.

The busiest day was Thursday, September 14, with 1,052 recorded clients. 

Demand for sessions tends to decline on weekends, but not since the new rule changes were announced: Counselors saw more than 250 people on consecutive Saturdays in mid-September. One Sunday in August had no appointments at all; counselors held 58 sessions on Sunday, September 17, and even logged 29 people on Labor Day.

There was a drop in demand after September 22, which Wagner attributed to California’s seven-day “cooling-off” period; in order to meet the October 1 deadline and still abide by the mandatory week delay, Golden State residents needed to book their appointments by the 22nd to receive case numbers on Friday, September 29.

An all-out scramble

The rush to receive a coveted case number from HUD on or before October 1 even generated headlines in the mainstream media, with the Orange County Register — the hometown paper of industry giant American Advisors Group, which is based in Orange, Calif. — describing a “stampede among would-be borrowers” last week. Multiple counseling agencies witnessed a major influx and a lack of appointments to the Register, mirroring what professionals told RMD earlier in the month.

The counseling figures also reveal why HUD was concerned enough to send an e-mail to all approved firms as the deadline approached, asking if anyone had additional availability.

“HECM counselors may not be equipped to handle unusual spikes in demand for HECM counseling,” HUD acknowledged in its message to counseling firms. “HUD is working with its approved HECM counselors to ensure the greatest availability of counseling resources in advance of this policy change, but cannot guarantee that all borrowers will be able to complete counseling prior to the effective date of these policy changes.”

However, Ibis’s data revealed that the crunch wasn’t completely dire.

“If needed, another 1,200 folks could have been counseled in the last week,” Wagner wrote. “We determine this by looking at the volume in the two prior weeks compared to the last week of September.”

Written by Alex Spanko

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  • >>which Wagner attributed to California’s seven-day “cooling-off” period

    Yep – we’re the only State in the Nation that has a law designed to benefit Older American’s … but does exactly the opposite. Way to go California.

    • Not the only state…MN has restricting laws too including borrowers have to be counseled by counselors located only in MN and we only have 4 agencies in the state (one has 2 HUD ID’s though). Sometimes the politicians best intended plans do just the opposite.

    • Hi Raymond,

      In Massachusetts we have to have in-person counseling (well, there is a way around it, but no lender will usually go for it). We have ten agencies listed as approved to do it, and one of those no longer does. All but one of those agencies is in the Eastern part of the state, the only one in the west is about an hour east from the New York border, and an hour south of the Vermont border. The rest are mostly clustered around the south eastern part of the Commonwealth.

      There are more than a few spots in our state where one has to drive more than an hour and a half to get to see a counselor.

      Short form every state has its issues. 🙂

      Frank J. Kautz, II
      Staff Attorney

      Community Service Network, Inc.
      52 Broadway
      Stoneham, MA 02180
      (781) 438-1977
      (781) 438-6037 fax
      FrankKautz@csninc.org

  • Wow, what a scramble to meet the deadline. We have a new game in town now but we will adapt!

    Monday was Monday, today is Wednesday, go on as normal and let the figures fall as they may! Don’t make a big issue with your clients, it is what it is, the world has not fallen apart, regardless of some of the talk you may have heard around the circuit!

    John A. Smaldone
    http://www.hanover-financial.com

  • “If needed, another 1,200 folks could have been counseled in the last week,” Wagner wrote. “We determine this by looking at the volume in the two prior weeks compared to the last week of September.”

    If this is true, which I’m highly skeptical of, then a lot of counseling agencies have some explaining to do. Most phone calls went unanswered, voicemails were full, or there was an auto-message that they could not take anymore appointments. There’s a big disconnect between what Jerry is saying and what actually happened.

      • Jerry, you seem to think we are pulling Ibis reports at the time of the counseling session. Not true, since we have to send them ahead of the session. The insanity of booking appointments happened mostly in the first couple of weeks of the month for a lot of us. By the middle of the month, I had already booked and pulled Ibis reports for every slot available for the rest of the month. After that, the only reason to go back to Ibis was if I had a cancellation or wanted to revise estimates during the session. And my total for the month was up over 100% compared to normal months. I could not have booked one more session in those last two weeks. I know that was true for a lot of others as well.

      • Christena,

        Not long ago Attorney Jamie Hopkins, a professor at the American College, told us that HUD would provide us the verdict on how Mortgagee Letter 2017-12 is doing with new borrowers when they started doing endorsements on 10/2/1017.

        Jamie, like Jerry, believe that because they handle numbers they know what those numbers mean. Both are terribly wrong. It’s just in Jamie’s case he is months off and even then what will HECMs endorsed in February 2018 really tells about how seniors are reacting to the changes in Mortgagee Letter 2017-12? Jamie does not understand the endorsement process.

        In Jerry’s case, he believes that the appointments he sees being made are the number of counseling sessions for the day rather than just the appointments made that day. It is not even the number of appointments that will happen in that day; it is generally appointments made with future counselees for dates in the future.

        Assumptions are tricky things. Both Jamie and Jerry made false assumptions that were relied upon in their conclusions. Not that long ago, several of the people responsible for data restructuring (“manipulation”) and reporting in the industry assured us that the word applications which HUD uses in their jargon to describe applications with case number assigned were in fact total applications before case number assignment. Many were surprised to learn that the fallout percentage between initial application and case number assignment is not low; just as many have been astounded that in the last six years we have been dealing with dropout rates between 30% and 40%.

        Nomenclature and jargon in each of our segments of the industry produce great misunderstanding. This is why it is time to develop a common nomenclature and jargon.

    • Hi Matt,

      Given that, according to the protocol that HUD has set up, prospective counselors have to make sure that people get the required paperwork more than a week in advance of the counseling session, I am guessing that we did not have those slots available. I know that I did not. I am guessing that most of us filled those slots up the weeks before.

      I ended up with two people who canceled the last week, by not showing up for their appointment. That meant that two sessions that I had went unused. I was rather sad about that, but there was nothing that I could do about it either. When I had someone cancel for Monday after on Thursday, I let the local NRMLA rep know and the appointment was used. I did everything I could to make sure that people got in and had the required counseling.

      What I did not do was answer my phone, which rang continuously for more than a week. Even though I put a comment on my outgoing message regarding having no appointments. I called everyone who left a message back, but we were all busy. We did not have the time to answer the phone, most of us were counseling.

      Frank J. Kautz, II
      Staff Attorney

      Community Service Network, Inc.
      52 Broadway
      Stoneham, MA 02180
      (781) 438-1977
      (781) 438-6037 fax
      FrankKautz@csninc.org

  • If counseling appointments told us much about endorsement volume, we would pursue HUD to make such data public so that we could prognosticate endorsement volume earlier than we do now. While it tells us something about volume, dropout rates between counseling and endorsement have been as high as the upper forty percent range in recent years. Because of how late in the calendar year the changes in Mortgagee Letter 2017-12 came, we will see little pull forward impact in endorsement numbers in calendar 2017 or 2018. There will be absolutely no impact on the endorsement count for either fiscal 2017 or 2018.

    The case number assignments for July 2017 were only the sixth best for any month between July 31, 2016 and August 1, 2017. Neither August nor September 2017 case numbers assigned have been posted by HUD as of today. It would seem like the July case numbers will not have much of a strongly positive impact on calendar year end totals even if that number ends up being the fifth best for the twelve months ended 9/30/2017 (a rather inconsequential date for case number assignments in the normal cycle of endorsement counts on either a calendar or fiscal year basis).

    The industry has a way of latching onto facts that excite us but end up having no material impact on the numbers which have real meaning and value such as endorsements. These counseling numbers will help improve early in the year endorsement counts for both fiscal 2018 and calendar 2018. They could even mean relatively higher revenues for lenders but not materially so but that is about all.

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