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The Coming Revival?


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Our Industry’s Market Opportunities & Challenges

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As a child growing up in the pentecostal church I often heard adults speak in hushed tones about the coming revival. Good things were just right around the corner. As I grew older I realized the promise of revival was a motivation for the faithful to endure despite present circumstances. Similarly there are more stories, rumors and hopes that the reverse mortgage industry will experience it’s own revival in the coming years. An article last Monday in Reuters entitled “U.S. retirees return to reverse mortgages, big banks stay away” addresses the baby boomer wave and the increasing need to fund retirement. It opens with “U.S. baby boomers desperate for retirement income are increasingly turning back to a financial product that, after the housing bust, had been left for dead…

See Secruian’s retirement study here

Download a transcript of this episode here.

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  1. From 2006 until now, we have gone from an industry that declared that proprietary reverse mortgage originations would dwarf HECM originations by 2010 to an industry whose only overwhelming principal products are HECMs. Today we are more dependent on HUD than we ever were in 2007. In those days we heard there was no practical barriers to ever increasing endorsement numbers; we know better now.

    Following the disastrous declines in originations during 2010, we immediately heard cries how we would reach 100,000 HECM originations during fiscal 2011. The principal reasons given were that seniors were turning 62 at a rate of 10,000 per day and Baby Boomers were less resistant to mortgages than their predecessors and in fact needed them due to taking mortgages into retirement like never before.

    At the end of last year we heard of a new campaign that would take us to 300,000 HECM endorsements in 2018. While lately we have heard the leaders of that campaign play down the importance of reaching that precise objective in one year (2018), perhaps there is room to pause and reflect on the failed predictions of the past.

    One significant issue about the campaign is not if we can reach some numeric objective but rather how sustainable is that level of endorsements in 2019 and beyond? That has become a matter of even more concern since we see the one part of the campaign solely dedicated to growth “extremely” focused on the lower two-thirds of coastal California.

    Yes, we need growth but we also need sustainable growth. In farming there is the principle that overworking the land can spoil that land for years to come. Will the Extreme Summit and its over focus on coastal California spoil that area for years to come? That should be a significant concern about the “Extreme Summit.”

  2. Good video presentation Shannon. I agree with what you say and yes, opportunities will be there in the coming months and years.

    However, we all need to realize we are in a different industry than we were 6 to 10 years ago. The opportunities are different today and the challenges are most definitely different today.

    I have said this many times before, if those that recognize the opportunities and jump on them with caution, those will be the one’s that will survive this changing industry.

    Supplement your market by focusing on those seniors with little debt to no debt on their homes. Go after small community banks, they need to increase their customer base. The HECM product is a great way to do that. There are many new markets we must look at and take advantage of to meet the challenges ahead.

    Like Shannon said, we will see a rising market in the HECM world, go after it!

    John A. Smaldone

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