How the West Was Won: Reverse Mortgages’ Left Coast Dominance

Month after month of data show Western states — particularly Colorado and Washington state — as hotbeds for reverse mortgage activity, and local originators say multiple factors make these locations ripe for volume.

Much of this reverse mortgage activity is in the Seattle and Denver metropolitan areas, where property values are exploding and helping drive reverse mortgage volume, originators said.

Lynn Wertzler, president of Greenleaf Financial in Portland, Ore., called the Seattle area an “ideal market,” with high property values and record appreciation.

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“I’m sure it has attracted much attention from national lenders so, undoubtedly, very substantial advertising and marketing dollars have been targeting this area,” said Wertzler, who is licensed in Washington. “According to one source, the average residential property value in Seattle is now $767,000 after aggregate appreciation in the last six years of about 85%, which is in the top three nationally.”

RMD frequently reports on data from sources such as CoreLogic — which tracks both home prices and equity levels — and Reverse Market Insight, which have shown distinct growth in Western states over the last few years.

Earlier this month, Washington came in second place in CoreLogic’s list of per-homeowner equity gains over the last year with $44,000; King County, home of Seattle, saw Home Equity Conversion Mortgage endorsement growth of 41.6% between the first quarters of 2017 and 2018, despite overall negative trends for the industry.

Meanwhile, in Denver, strong reverse mortgage uptake rates have been blamed for a persistent housing shortage that has increased competition among homebuyers and, in turn, driven prices higher.

Christine Jensen, branch manager at Fairway Independent Mortgage in Arvada, Colo., said ideal demographics contribute to the success of loans in her state.

“We have a rapidly aging population and people here like to age in place,” she said. “They have no intention of leaving, even if they have a second home. Once you get here, you stay here.”

Colorado HECM professionals have also enjoyed a warm reception from the overall community, Jensen said. By hosting workshops and forging partnerships with chambers of commerce and local district attorneys, reverse mortgage professionals have been able to further community outreach.

“We’ve got a really great team around the state, but even colleagues in competing companies  — we try to elevate the level of professionalism that is in the industry,” Jensen said.

Ellen Skaggs, reverse mortgage national sales manager for New American Funding in Tustin, Calif., makes her way to the Pacific Northwest often. In the Seattle area, she recently closed two loans and has two more in the origination phase — along with five proposals. In addition to strong property values, the Seattle area is loaded with senior amenities, making it a “goldmine” for reverse mortgage activity, she said.

“Washington has no state tax on your income, and if you cross right over the bridge, Oregon has no sales tax,” she said. “Retirees are moving to these areas.”

She also credits numerous hospitals, nearby airports, an emphasis on healthy lifestyle, and plenty of social gatherings as draws for seniors.

“I think it’s a more of a relaxed environment, if you’re not right in the middle of Seattle,” she said.

Thanks to the growing equity for homeowners, Bruce Simmons, reverse mortgage manager at American Liberty Mortgage, Inc. in Denver, said he does not foresee the reverse mortgage volume decreasing anytime soon.

“I think the reverse mortgage market is stable right now,” he said. “I am sure we would have been growing had [HUD] not changed the rules on us last year, but it is what it is now.”

Written by Maggie Callahan