Reverse mortgage counseling sessions have increased as more seniors seek out ways to soften the financial shock endured by the country during the COVID-19 coronavirus pandemic, but the reasons that seniors ultimately seek a reverse mortgage are not uniformly consistent. This is according to perspectives compiled from counselors at three major agencies which conduct reverse mortgage sessions for borrowers.
Interestingly, while Home Equity Conversion Mortgage (HECM) counseling sessions have risen during the pandemic period, counseling professionals from three separate organizations — Agawam, Mass.-based Cambridge Credit Counseling Corp., Sugar Land, Tex.-based Money Management International (MMI) and Farmington Hills, Mich.-based GreenPath Financial Wellness — revealed that proprietary reverse mortgage counseling sessions have actually recently gone down, reversing a constantly upward trend observed in 2019.
How counseling has changed during the pandemic: connection with clients, buffer asset
Each counselor related different takeaways when asked about the ways they’ve noticed that reverse mortgage counseling has changed during the pandemic. In one respect, the general desire for human interaction that may stem from many of the shelter-in-place and stay-at-home orders seems to have created more outwardly extroverted clients according to Jennifer Cosentini, housing director at Cambridge Credit Counseling Corp.
“One thing that we’ve noticed is that our clients seem to be a little more talkative than usual,” Cosentini tells RMD. “It’s not all business lately, there is a lot more personal sharing on both sides most likely due to the isolation we have all been feeling.”
Other counseled clients seem more inclined to use the reverse mortgage as something of a “buffer asset” in order to carry them through some of the financial difficulties that have arisen since the onset of the pandemic according to Jackie Boies, senior director of housing and bankruptcy services at MMI.
“Since the COVID-19 pandemic, we’re hearing from more reverse mortgage borrowers that they are considering a reverse mortgage as a ‘financial cushion,’” Boies explains. “Seniors have indicated they are concerned about their overall financial situation and will tap into their home equity as a safety net.”
In terms of emerging trends arising from the pandemic, both Cosentini and Kathy Conley, stakeholder engagement specialist at GreenPath, express that the overall reasoning behind seniors seeking out a reverse mortgage have not changed significantly beyond typical reasons, namely to get rid of an existing forward mortgage payment or have an available line of credit. Boies notices some additional trends emerging at MMI, however.
Seniors still want to eliminate their forward mortgage payment, but more seniors seem interested in doing so among seniors who have either recently become unemployed, or who now want to retire as a result of current events, she says.
“Secondly, more seniors are looking to remain in their home and age in place for as long as possible,” she says. “While this has always been a staple of the reverse mortgage product, we’ve recently had more of these conversations.”
HECM sessions rise, but perhaps for different reasons
Another change noted is just that reverse mortgage counseling sessions have risen, at least in regards to those dedicated to HECMs particularly in the early days of the coronavirus national emergency in the U.S., though that may not be specifically because of the pandemic even if the timelines align. This is according to Conley.
“In March and April of 2020, GreenPath conducted an increased number of reverse mortgage counseling sessions,” Conley tells RMD. “We cannot definitively say this increase was a result of the COVID-19 pandemic as other factors may have also contributed. One such factor is the change in LIBOR, which could result in reverse mortgage borrowers having access to a higher level of proceeds from a reverse mortgage and lower interest rates, which typically increase the number of homeowners refinancing their existing reverse mortgage.”
Still, it may be too early to determine definitive trends, Conley says. However, Cosentini and Boies both note increased HECM counseling activity within their own organizations, as well. At MMI, the increase has been more modest, but it has been present, Boies explains, while Cambridge observed more immediacy from clients, Cosentini says.
“I think during the first 6 weeks there was more urgency for counseling,” Cosentini says. “Everyone was feeling the uncertainty and wanted to get to their equity as fast as possible. I believe the urgency has calmed down a bit as the pandemic continues on and we now see that getting a mortgage during a pandemic is not as challenging as we may have thought.”
Proprietary reverse mortgage counseling sessions fall
In terms of proprietary sessions, Cosentini reports that they have stayed about the same during the pandemic at Cambridge, but both Conley and Boies report decreases in proprietary counseling sessions at GreenPath and MMI, respectively.
“Two of the proprietary reverse mortgages temporarily suspended originations for their products due to COVID-19 in March,” Conley explains, referring to the offerings from Liberty Reverse Mortgage and Reverse Mortgage Funding. “In April and May, GreenPath saw a slight decrease in proprietary reverse mortgage counseling sessions for that reason, as well as a slight increase in the number of HECM sessions.”
At MMI, the decline in proprietary sessions stood out because that organization observed a steady rise in them throughout 2019, according to Boies.