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Market Downside = Opportunity


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Opportunities are Created in a Down Market

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Reverse Mortgage Lending Blog It’s been a double hit for many. First the elimination of the popular federally-insured Standard fixed rate product in April and this month…the elimination of all existing products for one with first year restrictions on distributions. It’s a new age in reverse mortgage lending. One where competition is down and opportunity is up for those who adjust to the new product environment. The immediate impact of product eliminations is being felt as endorsements were down 16% after the April 1st elimination of the Standard Fixed Rate. What will our numbers look like three months from now for loans closed post October 1?


Those impacted the most in the wake of the Standard Fixed Rate elimination are those whose business model was heavily vested in fixed rate loans. Those with more a more diverse source of loans faired better…


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  1. While change is almost always disconcerting, I find that this is a great time for consultative selling. We need to stop being order takers and get in there and understand the borrowers problem, then come up with ways to solve them. We are supposed to be professionals, soi let’s prove that we are.

    • Mr. Murphy,

      Being professional is much different than you understand that word to be. What you are purporting is that HECM originators somehow are cash flow and financial consultants by mere NMLS licensing and being in this industry. The assumptions you make are not only incredible but border on the irresponsible.

      To be professional means one provides services legally and competently. Some originators have no formal training in financial matters and should not pretend to be something they are not. The only thing we can be paid for in this industry is competently originating a reverse mortgage. A competent reverse mortgage originator who is not a skilled financial adviser should not take that function on but should advise the prospect to seek the advice of those who are.

      Like Shannon, I believe that all reverse mortgage originators become (because many are not) mortgage planners providing competent planning alternatives and ideas centered around reverse mortgages. For many this will require a broader mortgage education and some focus on personal finances.

      Is it really so shameful to be a competent originator that we must self declare that we are professionals? It is very questionable when the highest certification in an industry uses the name professional in its title. Do doctors, lawyers, CPAs, architects, engineers, or other actual licensed professions resort to having a credential certifying that they are professional? It shows somewhat of an inferiority complex to be certified as a “professional” in any field.

  2. I like the car engine analogy. Think I’m going to use that! Might change my business cards to say Reverse Mortgage Planner too. It’s more descriptive of what we do.

  3. Great message, Shannon! Successful business folks remember the ‘Stockdale Paradox’, which says, “Face the brutal truth, but remain hopeful.”

    Right now the brutal truth is that big changes are underway in the HECM space, and it will mean extra work for people that want to change with the times. But there IS opportunity for those who force themselves to learn and adapt. Some folks will give up, drop out, or fail, and their market share will be gobbled up by the survivors!

    Times of chaos are almost always times of opportunity.

    • The statement upon which the Stockdale Paradox is based has nothing to do with hope or being hopeful. Instead Vice Admiral Stockdale proclaimed: “You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

      Vice Admiral was not advising that we face the brutal truth but that we be disciplined to confront the most brutal facts. The two are much different.

      It is not the additional work which is the issue but rather inherent lost revenues. As Mr. John Lunde has pointed out, all things being equal, the changes just incorporated into HECMs will result in total UPBs on HECMs originated this fiscal year being 49% lower this fiscal year when compared to the one just ended. Add in financial assessment and LESA and one can reasonably expect total industry UPBs to drop still further. Now consider that investor premiums will be lower than last year, lender revenue on HECMs originated this fiscal year could be over 60% (or more) lower this fiscal when compared to last.

      So while lost volume is one concern, lost revenues should be a far greater concern. Even if endorsements exceed 160,000 for fiscal 2014, revenues would remain about the same as last fiscal year. Based on the conversion rate for last fiscal year, that kind of endorsement volume would require that over 21,000 applications receive case numbers on average each month.

      No matter how much we work, it is highly doubtful we will see over 21,000 in any month over the next twelve. If you see that as feasible, please explain how.

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