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