Reverse mortgage professionals are optimistic in their outlook for the industry over the course of 2019, and are encouraged by strong business results for January, along with the increasing prevalence of proprietary products and an heightening level of general conversation surrounding reverse mortgage products in general.
That doesn’t mean, though, that optimism isn’t at least tempered by some of the setbacks that the reverse mortgage business endured in 2018.
“My crystal ball has a lot of fogginess in it, but I think we’ll see progress on HECM since people continue figuring out how to make the economics work,” said Chris Mayer, CEO of Longbridge Financial in a recent webinar hosted by RMD. “This will be a great year for proprietary products, and we’ll see substantial growth on new and different products. I expect us to continue to see real growth and more in proprietary over HECM products.”
He also added that the beginning of the new year has directly fed into the general optimism he feels for 2019 going forward.
“We’re all feeling pretty good, but I think there’s a lot of opportunity in 2019, and I’m happy with the way it started,” Mayer said.
Others are taking a longer view to their business predictions for the new year, because of the way that demographics typically shift over time.
“I’m long-term in my focus, so I’m not sure what this year will bring but I’m confident that the demographics will be good for this product,” said Steve Resch, VP of retirement strategies at Finance of America Reverse. “We’re seeing more conversions this year over last year, but five years from now this will be a mainstream product in my estimation because the demographics are going to drive it.”
Some of those demographics include seniors who fall into a more affluent category and qualify for a jumbo reverse mortgage product, while others are simply the numbers of seniors looking for ways they can leverage their home equity to maintain themselves in retirement, Resch said.
Another positive factor that could drive growth in the new year is the entry of bigger players making the product more generally accessible.
“January was a great month,” said Shelley Giordano, founder and chair of the Funding Longevity Task Force at the American College of Financial Services. “The theoretical potential for this product has always been enormous, but I do think that with the entry of Mutual of Omaha Bank, and the opportunity there to connect with a large forward lending group is helpful.”
Giordano previously added that the exit of players like Wells Fargo and Bank of America is a blow the industry “has yet to fully recover from,” given that those larger organizations also came with a lot of accessible offices across the country that could establish valuable face-to-face interactions. Having a larger player enter the space will naturally be positive as a result.
An upward trend in sales also has a tendency to inspire optimism, as noted by Richard Thorpe, head of retail sales for Reverse Mortgage Funding (RMF).
“We had a great January, up about 20 percent already, which goes to the sales training,” Thorpe shared. “I’m very bullish on this year, and on the potential of HECM for purchase (H4P) with the Realtors this year.”