A recent 17 percent year-over-year increase in reverse mortgage lending has brightened the mood among industry professionals who are exhorting colleagues now to step up their game further. The FHA insured 11,261 HECMs in March – that’s 17 percent higher than the same month last year. Spurred on by the American Recovery and Reinvestment Act of 2009 (a.k.a. the stimulus package), which raised the loan ceiling to $625,000, the industry is confident even in these tough economic times volume should still increase.
Jason Levy, CEO, Guardian First Funding Group, New York cites another reason for growth. “At the end of the day the need [for reverse mortgages] is severe; it’s survival – a harsh reality – but it’s not an act of failure,” Levy points out, “to borrow when you’re in your 60s, 70s and 80s. It’s actually an act of success.” He says that is because seniors have “positioned themselves perfectly to have independence later in life,” utilizing equity in their homes to provide financial support.
That’s right, according to Bart Johnson, Life Stages Financial, Inc., Newport Beach, Calif., “All the conversation we have ought to be around how do we deliver home equity solutions to create liquidity for this massive and rapidly growing population of senior Americans who have no other answers.”
The problem, offers Ralph Rosynek of 1st Reverse Financial Services, Westmont, Ill., is that “the delivery mechanism we have for this product doesn’t work. We’re not seeing the volume we expected because we have an ‘old world’ consideration about how to deliver this product.” That means, he says, that “some of us still believe you sell this product, and we know it really can’t be sold. [So] we have a big education problem,” Rosynek contends.
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at email@example.com