EPISODE #843
How Would Interest Rate Cuts Help HECM Lending?
Other Stories:
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[Kiplinger’s] How a Reverse Mortgage Could Be a Gray Divorce Solution.
- [HECMWorld] Where Have All the HELOCs Gone?
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Shannon Hicks
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.
1 Comment
Rather than stating the obvious potential results from lower 10 year CMT rates it would have been helpful to read an outline of the industry leaders’ game plan to market and reach out to the senior community. It was obvious in fiscal year 2018, there was no plan on how to deal with the Trump Administration’s change to the HECM financial structure. The results speak for themselves.
Some may want to argue that fiscal year 2018 was one of better years in the last decade with its almost 49,000 HECM endorsements. Yet only 23,600 of those 49,000 came from applications with case numbers assigned after 10/1/2017. Over half of the HECMs endorsed in fiscal year 2018 were related to applications with case numbers dated before 10/2/2018. The HECMs endorsed with case numbers assigned before 10/2/2017 represents only about 4 months of case number activity while those related to the later period represents about 8 months of such activity.
Besides this fiscal year, fiscal year 2023 was one of the most disappointing fiscal years for HECMs in over 2 decades. We had just completed the best year for HECM endorsements in 11 fiscal years and knew that interest rates were increasing, but even though lenders declared otherwise, they (and their originators) were unprepared for how bad things went. While that was our second (soon to be our third) worst year for HECM endorsements and despite the almost giddy good news we were being told about the start of fiscal year 2024, fiscal year 2024 had an absolute miserable start and finish. I closed my first HECM in early spring 2005 and have yet to see a single fiscal year as bad as this one when it comes to HECM endorsements and there were no H4Ps before fiscal 2009.
Now as for fiscal year 2025, it is starting worse than fiscal 2024 as to case number assignments despite a slow decline in the 10 year CMT rates. Some may be surprised to hear that despite the news that the Fed was cutting the interest rate by 50 basis points, the 10 year CMT rate ended HIGHER than it began. While one of the main reasons for this is no doubt that the 10 year CMT had at least a 50 basis rate Fed interest rate drop baked into it.
A major apparent reason for holding the NRMLA National Convention before October this year is so that the fallout from the September 2024 and fiscal year 2024 HECM endorsement counts would not spoil the NRMLA National Convention. After all of the cheers for the end of another fiscal year will come the reality on Tuesday October 1 that the HECM endorsement count for fiscal year 2024 stands as the worst fiscal year for HECM endorsements since 2003; it will be up more than 6% lower than 30,000. Right now the worst total HECM endorsement count for any fiscal year since 2003 had 31,274 HECM endorsements (fiscal year 2019).
When will things turn around and start getting better with substantially less reliance on HECM Refis than in fiscal years 2021 and 2022? The apparent answer is not fiscal year 2025.