Hey! How are you?!

[2-minute read]
“Hey. Remember that time when we met and talked about a reverse mortgage 3 years ago and you said no? Do you want to talk again?” That approach would be somewhat believable if it were from a Saturday Night Live skit. No reverse mortgage professional with a functioning cerebral cortex would ever utter such words. However, it’s easy to find oneself saying something that while less abrasive, pretty much reflects the same sentiment- ‘you said no and I can still help you’.

While you typically ‘think in reverse’ 16 hours each day your previous potential borrowers do not. In fact, count yourself lucky if they even remember your name. For the handful of you reading who kept in touch with newsletters, birthday cards, or phone calls- congratulations. Read More

What comes AFTER the Coronavirus?

life after coronavirus covid-19 economy stagflation

A look at our industry’s growth and the potential economic repercussions of the COVID-19 pandemic

Sheltering in place took on a new meaning for HECM lenders in the first weeks of the coronavirus pandemic. Not only did employees and originators shelter at home, but many also hunkered down slowing their loan production as loan profitability collapsed in the secondary markets.

So what may we expect after the coronavirus or COVID-19 crisis is behind us? Our first indicators may be found in the proverbial eye of the storm that lies between the control of the virus’ spread and the anticipated long-term economic fallout in the decade that follows.

Today we examine 3 possible outcomes:

  • Fewer property tax deferral programs for seniors
  • Economic stagflation
  • Technological innovation and adaptation

New Jersey Governor Phil Murphy’s plan would ax property tax aid for seniors


Wealth disparity and home equity

Wealth inequality, economic chaos & the role of home equity

Wealth and income inequality. Pulling back from the distasteful political debates that continue to rage on about the haves and have nots it is a clear and present reality. The Pew Research Center made these startling findings. “The wealth gap between upper-income and lower- and middle-income families has grown wider this century. Upper-income families were the only income tier able to build on their wealth from 2001 to 2016, adding 33% at the median.” Why such a disparity? Good question. “The reason for this is that middle-income families are more dependent on home equity as a source of wealth than upper-income families.” With home equity playing a crucial role for middle-income Americans reverse mortgages and equity-extraction loans will become even more essential.

Pew Research Center Paper

CNBC: 2nd Quarter GDP Plunged 32.9%

History- You’re Living It

Imagine it’s 1956 and you are writing your first 30-year fixed-rate mortgage as a loan officer working for your local bank. It was a historic period in home financing as most mortgages up to that time had 20 year amortization periods until the Federal Reserve began significantly increasing interest rates. In the effort to keep home financing affordable despite higher rates the Federal Housing Administration broadly adopted what is now the gold standard of mortgage lending- the 30-year fixed.

Today we find ourselves in the historic moment of the COVID-19 pandemic which has left many sectors of our economy closed, partially opened, or closed again. This modern-day plague has instilled a strong sense of insecurity in many, especially retirees. However, history has taught us that disease and economic upheaval are found throughout written history.  The Roman Emperor Marcus Aurelius wrote the following during the Antonine Plague. “To bear in mind constantly that all of this has happened before and will happen again—the same plot from beginning to end, the identical staging”.

Just as the Fed’s continued interest rate hikes in the 1950s spurred innovation and public acceptance of the 30-year mortgage, economic uncertainty is moving many undecided homeowners to reconsider a reverse mortgage- or at least to put their guard down momentarily to research how the loan works. Uncertainty and need are still two of the common motivators in getting a reverse mortgage.  It then comes as no surprise that counseling agencies find themselves struggling to find available slots for required borrower counseling- not surprising since FHA case numbers issued have surged to a record number HECM applications recorded in the months of March, April and May when compared to recent years.

Another historical shift we’re experiencing is how quickly older Americans are embracing remote meeting technology to stay in touch with family and friends while ‘social distancing’. Grandma and Grandpa are highly motivated to see their grandchildren’s smile and interact on a more intimate level than merely a phone call. Consequently, the resistance to using teleconferencing services such as Skype, Zoom, or Google Meet has dropped considerably. Reverse mortgage professionals have seized upon this shift offering remote appointments and ‘touch-less’ loan closings.

While useful in times of relative economic stability reverse mortgages are absolutely essential as long term financial outlooks are clouded by concerns of inflation, a volatile stock market, and investment losses. Will the general public suddenly embrace reverse mortgages just as they adopted the 30-year mortgage 70 years ago? Don’t go placing your bets in Vegas just yet. However, the present moment in history we share provides the occasion to make inroads with homeowners and financial professionals alike- both who’ve been harshly reminded that the only thing that’s certain in life is uncertainty itself.