Why the HECM may be a ‘gotcha’ market for consumers
Last week we addressed the divergent relationship between the increasing need of retiring homeowners and the continued decline in reverse mortgage volume. Beyond the potential fallout of future HECM regulations what is hindering market growth?
The need for the reverse mortgage is robust and growing. At the end of last year, there were approximately 24 million homeowners aged 65 or older and this group is growing by one million individuals every year; so says Jack Guttentag, better known as the Mortgage Professor in his latest article “How to unleash the reverse mortgage market”. Despite the fact that more seniors are unable to maintain their standard of living in retirement “the federally-insured home equity conversion mortgage program has barely dented the problem”, said Guttentag. How small of a dent? To date, fewer than one million HECMs have been endorsed since the program’s launch date.
What factors are suppressing the growth of the reverse mortgage while the financial need continues to grow?
Download a transcript of this episode here.
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1 Comment
We need to thank Jack for bringing us this perspective. If we do not hear from those who have a different view point, we will think we are just fine and will continue getting months and months of endorsements of less than 4,000 endorsements monthly. Yes, the product has changed but what have we changed. Do our marketing and business practices reflect a “gotcha” approach or a buyer’s market where information is accurate and transparent?
For years the answer to the question of why do we do this this way has been BECAUSE it works. Maybe just maybe what worked in 1993 needs to be updated and improved. Maybe it is time to look at our marketing and sales practices not only as stale and old but as translucent and inhospitable to those we are reaching out to.
Can we change? Can we change what we actually can change? Yes, there has been more than enough product changes but where are the changes in our marketing and the information we provide outside of our loan docs?
It is amazing that we are so extroverted. It is about time that we look at ourselves and start making more user friendly experiences for those who are looking at our products.