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The 6 Ps of Our Industry’s Health

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Part 1 of 2 of our exclusive interview with Dan Hultquist



Editor in Chief:
As a prominent commentator and Editor in Chief at, 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.
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  1. I think both Dan and Shannon should be highly commended for the great job they did in putting this program together. Thank you both.

    While I agree with the general premise that Dan presents, that does not mean I agree with all points.

    As to product mix, a somewhat inordinate amount of time was spent on H4P production. I do not share the same vision and have little support for H4Ps. In cases I have seen poor advice given to get the borrower to use all proceeds (in hope of maximizing a commission) to acquire the home when the expected arbitrage by investing the cash is wisely quite restricted by the borrower. Its best and highest use seems to be limited to marketing, especially to Realtors. Yes, it is also true that the industry can use all of “the 3.4%” it can get; so I am not exactly against this rather distracting product either.

    For those who are not familiar with H4P stats, there are but two fiscal years that have had more than 2,600 H4P endorsements, fiscal years ended September 30, 2017 and 2018. Total H4P endorsements have NEVER reached 2,700 for any fiscal year. Last fiscal year (2022), the percentage of total H4P endorsements to the total endorsements of all types was 4.5% which was just 2,230 H4P endorsements. This fiscal year (based on the latest data through August 2022 provided in HUD’s monthly FHA Production Report) the percentage of H4P endorsements to HECM endorsements of all types is just 3.4% for a mere total of 2,059 H4P endorsements with but one more month to report. The only remaining question is if the total H4P endorsements can reach 2,400 for last fiscal year when total HECM endorsements of all types for last fiscal year are 64,489, the highest such total seen in over a decade.

    So while I appreciate the efforts of our two lender leaders in the area of H4Ps, H4P remains a huge disappointment in the industry. And why is that? Shortly after H4P was created in HERA of 2008, one of the leading data gatherers for the industry took one of the General Sessions at the NRMLA National Convention and showed us convincingly how in a few short fiscal years H4P endorsements would be 50% of all HECM endorsements.

    As to product mix, I am not so sure that H4P endorsement production is a good indicator for anything since it has varied between 2,200 and 2,700 for the last seven fiscal years (and most likely 8 with fiscal 2022). Worse, there seems to be no correlation between total annual HECM endorsement volume in that 7 (or 8) fiscal year period and H4P endorsement volume. For example, fiscal year year 2019 had 2,282 H4P endorsements with only 31,274 total HECM endorsements and fiscal 2021 had just 2,230 (or 52) less H4P endorsements with over 49,000 total HECM endorsements. For last fiscal year, the industry will be fortunate to see 2,400 H4P endorsements when total HECM endorsements for fiscal 2022 are 64,489 is THE best such total in over a decade. If H4P endorsements were proportionate to total HECM endorsements then the 2,282 H4P endorsements for fiscal 2019 should be 4,706 H4P endorsements for fiscal 2022. So rather than being over twice as large as the H4P endorsements for fiscal 2019, the actual increase for last fiscal year will be fortunate to reach 5% higher than the H4P endorsements for fiscal 2019.

    So let us be clear, up through 10/1/2022, H4P endorsements have NOT been a useful indicator as to the health of the HECM program and most likely will remain so for years, if not for decades to come.

    The only indicator that seems to be reasonably reliable as to endorsements for the next fiscal year to a large degree are the number of Traditional HECMs endorsed in the prior fiscal year and to a somewhat lesser degree, HECM Refis endorsed in that same fiscal year. Yet endorsements are one of the weaker indicators as Dan stated. The indicator that seems most useful in evaluating HECM endorsement production as to the next fiscal year are the mix of HECM products (excluding H4P) in the last four months of the prior fiscal year determined by evaluating and weighting (in the same manner as endorsement information presented above) the HECM Case Number Assignment product mix contained in that four months of data. In some fiscal years, the last five months of HECM case number assignment data must be used such as was the case with fiscal 2018.

    So far the conversation between these two communication leaders, Dan and Shannon, has been interesting. I am a little miffed (pun intended) that the elephant in the room that has to do with HUD’s principal responsibility to Congress in relation to the HECM program seems to be overlooked, the MMIF. I hope Part 2 proves me wrong. Remember if HUD is concerned about the situation in the MMIF, it will do what it believes necessary to scale back HECM endorsements EVEN if that means reducing the PLFs further. I remember a NRMLA West session hosted by a former NRMLA Chairperson where Brian Montgomery, then FHA Commissioner, responded to a comment the host made by gently responding that HUD would be pleased with just 20,000 HECM endorsements each year. Imagine that was in the first fiscal year that the industry did over 100,000 HECM endorsements.

    Finally, I hope the two speakers will focus on numerical tests that can be performed in order to arrive at the subjective conclusions called for in the 6 P analysis.

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