As reverse mortgage counselors adapt to shifting levels of volume since the October rule changes, they are also adjusting to the types of borrowers seeking counseling.
For the first two to three months after the lower principal limit factors took effect, Cambridge Credit Counseling Corp. saw more needs-based inquiries nationwide, but that is changing, said Justin Lally, reverse mortgage counseling supervisor.
“We are seeing an increase in those potential borrowers applying for a reverse mortgage as a way to supplement their overall retirement plan,” he said.
At the nationwide counseling organization Navicore Solutions, Rich Verrillo, the senior housing partnerships manager, said he is seeing the same mix of needs-based borrowers versus wealthier borrowers since October. Of needs-based borrowers, fewer want a reverse mortgage to pay off an existing mortgage, Verrillo said.
“The profile of the borrower really hasn’t changed, but most of the borrowers we are seeing either have no mortgage or a low existing mortgage,” he said.
In upstate New York, counselors also are seeing the same volume of needs-based borrowers. Colden Ray, a homeownership counselor at Belmont Housing Resources in western New York, said the only change she and colleagues have noticed is fewer borrowers looking for a mortgage payoff.
“I think at this point we’re seeing the same kind of demographics,” she said. “Honestly, it’s probably a pretty similar mix of higher income and lower income.”
Martin Rubin, a senior reverse mortgage counselor at Consolidated Credit Solutions in Ft. Lauderdale, Fla., which counsels borrowers nationwide, echoed Ray.
“I don’t really see that much of a difference in who is coming in,” Rubin said. “I’m still seeing people who need to pay off a loan, have small loans that need to be repaid, or people looking for an additional cushion.”
Lally added that he also is noticing an increase in better-informed borrowers, making the whole process easier.
“We’re able to focus more on the smaller details of the program and spend more time discussing loan comparisons and other calculations,” Lally said.
While needs-based borrowers still consider reverse mortgages, fewer open one after running the numbers since the principal limit and mortgage insurance premium changes, Ray said about her western New York market.
“They are just not able to get out of it what they were hoping,” Ray said. “It’s not, for a lot of folks, as helpful because it’s not giving them the cushion they want or the emergency help they need right now. It just doesn’t make as much financial sense for them.”
Written by Maggie Callahan