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Lower interest rates have erased most of 2017 PLF cuts


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Record-low LIBOR rates and competitive margins erase most of 2017 PLF reductions

Dan Hultquist of Finance of America Reverse returns for another exclusive interview; this time discussing how a record low-interest-rate environment do erase most of the impact of the October 2017 PLF reduction and much more.



Editor in Chief: HECMWorld.com
As a prominent commentator and Editor in Chief at HECMWorld.com, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
Readers wishing to submit stories or interview requests can reach our team at: info@hecmworld.com.

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  1. Dan is correct. A 150 margin should be about a 3.06 % Expected Rate this week which gives 52.4% to 75% PLF, exactly the same range as PLF %’s with the old 5.06% Expected Rate.

  2. About 15 years ago, the broker I was working for scoffed when it was suggested that the weekly announced HECM initial interest rate could be higher than the weekly announced expected interest rate. Back then the only indices that could be used were the Constant Maturity Treasury rate indices. So I began monitoring that index. Within six months, we had months where the CMT index was lower than the monthly CMT. For about six months, most weeks experienced this level of nontechnical inversion.

    The 10 year CMT was selected because when the index was selected, most influential observers believed that the majority of HECMs would terminate within 10 years of origination. Based on data posted by HUD over the last three decades, this opinion has proven to be true.

    During this calendar and despite what reporters have told us, we have yet to experience a technical inversion of interest rates. For an inversion to occur, the ten year federal rate must drop significantly below the 2 year rate. So far this difference has not occurred. Two of the major cable news services have jumped on this indicator as a clear sign that we are heading into recession this year. Then several showed a slide that only a small percentage of economists believe recession will occur this year and about a third believe it will happen no later than 12/31/2020. The largest percentage believe it will happen in 2021 and finally 26% believe it will happen AFTER 2021. Of course the politically biased reporters spoke as if recession were almost in effect right now.

    Right the important thing that interest conditions are favorable to HECM origination.

  3. Dan is amazing….Thanks Shannon for all you for our industry and beyond! What great content
    Loren Riddick, CRMP
    National Direction of Reverse Lending Thrive Mortgage

  4. Shannon…please add “do” for proper grammar thx man for all you do

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