HECM Changes & the Ensuing Crash in Volume
Since it’s introduction in the late 1980’s the Home Equity Conversion mortgage was a collateral-based product. In recent years the reverse mortgage or HECM has shifted from a loan based on the homeowner’s equity and age to a fully underwritten mortgage requiring borrowers to prove their financial capacity to pay property taxes and insurance.
Not surprisingly, these changes narrowed the potential market for the reverse mortgage and volumes have dropped by more than 50%, in part to the housing crash and numerous lending ratio reductions and financial underwriting requirements…
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