Increased reverse mortgage appeal in a frozen housing market? - Skip to content

Increased reverse mortgage appeal in a frozen housing market?

frozen housing market advantages

How the appeal of reverse mortgages could be boosted by a frozen housing market

Real Estate Insights by Snapforce |

The U.S. housing market is frozen solid with mortgage rates that have more than doubled and median home prices remaining near record highs. In a frozen real estate market where property sales are sluggish and housing values stagnate, older homeowners may find themselves hesitant to explore traditional options for unlocking the value in their homes.

Today we’ll examine how a frozen market could increase the appeal of reverse mortgages, and why older homeowners who may wish to sell or relocate are increasingly reluctant to do so. The benefit for reverse mortgage originators who better understand the real estate markets in which they originate is the ability to craft more informed and effective marketing and sales strategies in today’s market.

Earlier this month we discussed the forces at play that have housing prices stuck. One factor at play across much of the western U.S. is excessive payment to earnings or PE ratios.

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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.
Readers wishing to submit stories or interview requests can reach our team at:

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  1. Shannon,

    Hope all is well with you, long time no talk! This was a good presentation, seniors who want to downsize and have a large amount of equity in their homes but don’t know whether to put the Cart before the Horse. What I mean by that is a particular senior couple in my scenario don’t want to sell their Home, then gamble on finding their ideal smaller Home, then find themselves with nowhere to go.

    Solution, get a reverse mortgage on their existing Home, take out a fixed rate loan so all their equity is available to them, set the funds aside, then go shopping, when they find their ideal lifetime place to remain in, take out a HECM for purchase on the new Home.

    Yes, I know what you are going to say, the closing costs will be enormous to absorb on both Homes in such a short period of time, but this still may be the safest way to avoid the gamble of having to rush and sell, possibly finding themselves without a place to live for a while ETC. Just a thought to ponder over!


    • John,

      I think I remember someone with a last name spelled close to your last name commenting with some frequency on RMD, HW, and the Reverse Review about a decade or so ago. If that is not you, my apologies.

      Starting on September 30, 2013, HUD will not permit a full draw at closing on any HECM that does not have at least 90% mandatory obligations, no matter what kind of HECM it is. That is very old stuff. A lot of us were not in the industry before 1/1/2014. Without at least 50% of the proceeds required to paying mandatory obligations at closing, the starting UPB cannot exceed 60% the PL (Principal Limit).

      That is not true with proprietary reverse mortgages (or as they were once called, jumbo) but the product is much riskier and normally has lower proceeds available than the PL on a HECM.

      Your idea worked just fine at a different time.

      • You are right,

        I should have said an adjustable rate mortgage, not a fixed. Yes,I am the same John Smaldone, should have known what you spelled out and I appreciate you that!

        Thanks again Cynic,


  2. With HECM market equilibrium demand near its lowest level in two decades, one would like to see acceptance of HECMs, not just increased acceptance of HECMs.

    Some are declaring demand for HECMs is at all-time highs but market equilibrium was at a 26,700 annual endorsement demand rate during the third quarter of fiscal year 2023. In fiscal year 2009 the market equilibrium demand rate was over 114,000. Telephone calls about HECMs are not demand but MAY indicate what market equilibrium demand is (but even that is iffy).

    Real demand is not activity but what brings the HECM market into equilibrium based on supply. Available supply may be unlimited but legitimate supply is not. In fact, it is dismal right now.

    • Realist, really?

      Demand will always reach its maximum based on the level of supply available for a product when the economy is at equilibrium. Your comment is a little confusing but I guess your thought is that demand is at its current peak based on the reverse mortgages that are available in the market. On that point, my econ profs would agree.

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