Home prices are on the rise on Long Island, New York. The Multiple Listing Service of Long Island reported in August that median prices increased annually by 3.8% in Nassau County to $540,000 and by 6.8% in Suffolk County to $390,000.
These increases are creating an opportunity for reverse mortgage lenders, according to Tim Kennedy, CRMP, a reverse mortgage specialist with US Mortgage Corporation in Melville, N.Y.
“Because home values are increasing, taxes are increasing, and many seniors here can’t afford to stay or go,” he says.
A reverse mortgage can provide a lifeline to these struggling seniors. But the problem on Long Island is twofold: a lack of available proprietary products to offer (most are still not approved in New York), and a lack of education about the value of reverse mortgages on the part of the consumer and financial planners.
“I have to constantly educate the financial planners, elder law attorneys, estate planners, and real estate agents,” he says. “Once they get past the misconceptions, then we still have to educate seniors about the benefits. It takes multiple conversations just to get them to pay attention.”
The people who seem to be paying attention on Long Island, however, are the children of the elder generation.
“What’s unique in my experience is that most of my referrals are coming from children,” he says. “They’re the ones who see reverse mortgages as a retirement tool rather than a last resort.”
Another area originator shared that the general growth seen in local property values makes a HECM proposition more attractive for borrowers looking for new solutions to make ends meet in retirement.
“From what we’re seeing from borrowers in the local market, Suffolk County property values appear to be stable, even increasing in some areas,” said Patricia Whitlock, a CRMP at Quontic Bank based in Suffolk County. “The combination of stable home values and associated home equity continues to make HECM a great workable solution for borrowers with mortgages to pay off and expenses to meet,” she said.
Whitlock also shared that while the general demographic bulk of her clients hasn’t changed much during her decade in the reverse mortgage origination space, she has seen an uptick in the endorsement of the HECM product by other parties.
“I have seen a few borrowers at the young end of the age range, but the trend remains as it has been for me for the last 10 years; with older, single women making up the bulk of my clients,” she said. “One notable difference is more acceptance of the product by financial advisors.”
As for proprietary products on Long Island, no one knows for sure when they’ll be available. Kennedy says he hears about their possible approval often, but “it’s all just the rumor mill.”
Until October 2017, when HUD implemented its drastic industry changes, his business had shown steady growth, says Kennedy, who’s been in industry since 1994. But this year, even though interest grew, his closings remained stagnant since many seniors no longer qualified.
“If I can continue educating realtors and financial planners, we’ll all be able to help the seniors in our area,” he says. “It’s just going to take time and patience.”
Written by Meredith Landry