Despite Data, Originators See Little Change in HECM Borrower Age

Recent data indicated that fewer younger borrowers are opting for reverse mortgages, but this age shift has not been noticeable for many originators nationwide.

A recent report from Baseline Reverse looked at loans funded in January and pooled in February — which consisted of both Home Equity Conversion Mortgages originated under the new, lower principal limit factors enacted last fall and loans with the old PLF structure. Among the new-PLF loans, there were fewer borrowers aged 74 and under.

“The lower PLFs may make it harder for younger borrowers to qualify,” Baseline Reverse founder Dan Ribler told RMD earlier this month, though he added that it was still early to draw concrete conclusions about borrower age under the new structure.


Ellen Skaggs, the reverse national sales manager with New American Funding in Tustin, Calif., said that she has not observed changes in the ages of borrowers — but she has had more younger prospective borrowers inquiring about the loans.

“I do see the younger borrowers in their earlier to mid 60s investigating the prospect of the reverse mortgage,” Skaggs said.

Jesse Brewer, a reverse mortgage specialist with Resolute Bank in Nevada, said he has not seen a noticeable decline in borrowers under 75 years old.

“I haven’t noticed a change one way or the other with regards to age, or I at least haven’t had the volume to get a gauge on that data point,” Brewer said.

For Tim Linger, broker and owner of HECM Senior Home Financing in Orlando, Fla., the recent data is “100 percent true” for the borrowers he has recently encountered. Linger, who deals mostly with HECM for Purchase transactions, said higher closing costs and lower loan-to-value ratios have made younger borrowers turn away from the HECM.

“They look at the math and the closing costs, and I really have a tough time arguing with them,” Linger said.

But Malcolm Tennant, president of Access Reverse Mortgage Corporation, said the changes he has observed in borrowers have not been age-related.

“I have not noticed (age) particularly, but I have noted a higher proportion of need-driven inquiries or interest versus financial planning-type inquiries,” he said.

Skaggs agreed that she also perceived changes unrelated to age —  specifically a product shift toward HECMs for Purchase, as well as fixed-rate reverse mortgages becoming better options.

Written by Maggie Callahan

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  • There is a tendency in the industry to prefer anecdotal evidence over fact. That trend was clearly seen when the MetLife Mature Market Institute (MMMI) and the National Council on Aging (NCOA) released their joint study in March 2012 on the changes not only in attitudes about and changing motives in getting HECMs. Most of the information was more curious than adding to a better understanding of what was going on in the HECM market place with one big exception. Taken from some preliminary data gathered through the NCOA software used in counseling named FIT (Financial Interview Tool).

    The study found that based solely on unverified and unconfirmed data, counselees were getting younger to a highly substantial extent. This trivia was then attributed to borrowers getting younger without any verification with HUD to see if it was true. In the end it was found that the FIT data was far more anecdotal than fact as the drop in age was slower during the period under consideration in the study than the overall trend since the HECM was first introduced in fiscal 1989.

    Until HUD confirms the data, it seems for now from the issuance data that borrowers are getting older. This is not the first time in the industry that has occurred. While the overall trend has been to see the age of the youngest borrower dropping, sporadically we have periods where that trend reversed but not for very long.

    Far more worrisome is lowered enthusiasm (if not passivity) that the financial advising community is showing towards the HECM. Industry demand only confirms what seems obvious. Did anyone check on national demand for HECMs for Purchase? For the first four months of this fiscal year, it has dropped back to a Fiscal 2014 level when total endorsements were 1,807 rather than the 2,885 level seen last fiscal year.

    While we prefer news to our liking, that information if simply anecdotal may very easily lead us done the wrong road. I am afraid that new interest in H4P has rarely led to either waking the sleeping giant which yet to prove itself a giant. Potential demand for H4P is no different than potential demand for Traditional HECMs until there are closings, it is like the biggest fish ever caught, except it got away.

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