Mortgage Orb journalist Phil Hall writes that while many sectors have either crashed or are struggling to stay active, one mortgage product is showing no signs of slowing down: reverse mortgages. In The Hope From Reverse Mortgages, Hall covers how the relatively unknown product has such big potential in the marketplace.
"We’re developing more seniors every day, and it’s a growing market," says David Bernstein, national reverse mortgage specialist with Barclay Funding, Rockledge, Pa. "I believe the Federal Housing Administration’s (FHA) reverse mortgage program, within the next two to three years, will be one of the largest mortgage programs."
While I hope Berstein is right, I would be shocked to see that happen in as little as three years. One thing is clear, the product is finding an audience that needs this type of product especially as many have seen their proverbial golden years tarnished by the current economic crisis.
Randy Gilster, president of First American Loan Production Services in Westlake, Texas, points out that the recession caught many people off guard, resulting in a disruption to the traditional forms of financial planning. "During the boom years, rising home values and healthy stock market gains provided a range of options for seniors and older Baby Boomers looking for ways to pay for retirement," he says. "Remember, these groups tended to have higher savings, more investments and more home equity than younger Americans. But seniors and older Baby Boomers have been hard hit by the economic downturn. They’ve seen a sharp drop in their equity accounts and 401(k)s. Meanwhile, falling interest rates are hurting retirees with fixed income investments. Pensions and retiree health benefits are being cut back or eliminated."
The reverse mortgage opportunity has lead to many new lenders getting into the business, which is necessary for the industry to see volume increase. "Lenders of all sizes are looking to enter this sector all of the time," says Peter Bell, president of the National Reverse Mortgage Lenders Association (NRMLA). "Mortgage brokers also see it as a growth area."
Jeff Lewis, chairman of Generation Mortgage in Atlanta, welcomes the arrival of larger lenders to the sector. "We’ve always felt that the growth of the product will happen faster with more big companies involved," he says. "They have more marketing money to spend, and the product has more mainstream type of recognition when many of these companies are providing it."
It’s a good article, definitely worth the read.