When looking at the levels of business for the reverse mortgage industry in the Mid-Atlantic region of the United States, a clear-cut contender for the highest levels of volume among the eight states and the District of Columbia clearly emerges. According to reverse mortgage loan data from the U.S. Department of Housing and Urban Development (HUD), Pennsylvania has seen nearly 39,000 reverse mortgages funded through 2018.
That year, which represented a record low for originations, Pennsylvania still managed to take the top spot in the region, recording nearly 1,100 loans funded. That is a figure that easily outstripped the next highest number of funded loans coming from the state of Ohio, which that year stood at only 676.
Pennsylvania may not have the highest median home values in the country, but what it does have going for it is a high concentration of seniors, since nearly a quarter of its population – nearly 3 million people – are over the age of 60, according to the state’s Department of Aging. That’s an opportunity that has been reflected in the state’s origination environment.
- Total Pennsylvania Population: 12.8 million (U.S. Census)
- Senior Population (Ages 60 and up): Approximately 2.9 million (22.3% of population, Penn. Department of Aging)
- Average Home Value: $198,377 (Zillow)
- Year-over-year Home Price Appreciation: 4% (Zillow)
Favorable demographics, diverse set of borrowers
The high concentration of seniors in the state makes the opportunities for reverse business there very apparent, but there is also a lot of diversity in the types of properties and the levels of affluence among the seniors in the state. This is according to Steve Broaddus, director of the reverse mortgage division at First Alliance Home Mortgage in Feasterville, Penn.
“One of the things that stands out to me as I talk to other parts of the country is our diversity, since Pennsylvania is certainly not a cookie cutter state,” Broaddus tells RMD. “There are so many different types of housing everywhere I go. I can be talking with someone in a newly-constructed house, and on the same day I can be having a conversation with someone who lives in a stone house built in the 1800s.”
Each of those different property types also comes with different infrastructural details as well, including water supply systems and acreage, in addition to being applied to other types of housing like condos.
Favorable demographics, diverse set of borrowers
That diversity has also been seen by Jason Eichmiller, VP of the reverse mortgage division at First Alliance in Ambler, Penn., but also extends to the sources of business that can be gleaned within the state.
“In Pennsylvania, you have all sorts of different homeowners, financial advisors and referral sources, and they’re pretty well-educated on how the reverse mortgage works,” he says. “[They know] who they’re appropriate and not appropriate for, and it’s just up to us as originators to keep moving the ball forward, to keep educating and reaching out to make sure that they know that this is a resource that can be used. And because of the new government rules, they’re safe and secure, not only for seniors, but their family members.”
The greater incorporation of financial planners into the process in Pennsylvania has also notably increased from the perspective of Broaddus’ business.
“I only earn my business by word of mouth, I don’t participate in buying leads, telemarketing, direct mail or any of those types of things,” he says. “So over time, the sources of my referrals have ebbed and flowed from different types of professionals. I think it’s becoming more and more common for financial advisors to be valuable referral sources, more than they were even four or five years ago. So that’s an opportunity.”
No typical borrower profile
The high population of seniors in Pennsylvania has led to a wide variety of borrower profiles, so a “typical” profile couldn’t really be identified by Steve Broaddus. One thing that has lent itself to is the greater incorporation of technology in the way that he communicates with his clients, which wasn’t very much of a factor within the past decade, he says.
“I probably don’t have a typical borrower profile, because I get age ranges all the way down and all the way up the range of seniors,” he says. “I was thinking this morning about how my business in 2020 compares to the way it was 8-10 years ago, and technology usage of the borrower has changed.”
Broaddus texts more with reverse mortgage borrowers now than he ever has before, a major departure from 6-8 years ago when his clients typically didn’t have the ability to even email, he says.
“It’s quite common for them now to have a printer and maybe even ability to scan or fax and certainly to text and so forth. So a lot more of those today than not.”
For Eichmiller, most of his borrowers are those who may have a baseline of retirement assets but are simply worried that they’ll outlive their assets, he says.
“My typical client is a senior in their early-to-mid 60s who is doing well – they work, they have a pension, they have retirement – but they’re concerned that at their lifestyle and the rate they’re going, they might outlive their money,” Eichmiller says. “So, the folks that I really get pleasure out of helping are those [we can inform about home equity] that they can use to basically keep retirement going.”
One recent client of Eichmiller’s was an estate attorney who had over $1 million in assets in the bank, who used a reverse mortgage to purchase a new home.
“A million dollars is a lot of money, but he’s in his 60s,” Eichmiller says. “And he wanted to make sure that every single dollar that could possibly be in his retirement account, stayed in his retirement account, especially with the way the economy is going right now.”