The HECM industry is at a crossroads

Where we stand

It’s not just the housing market that’s poised for a big shift. So is reverse mortgage lending. While industry participants have typically concerned themselves with potential changes to the federally-insured Home Equity Conversion Mortgage program or state regulations another sea change is approaching the horizon.

There’s an old investing adage that says, “don’t fight the Fed”. In other words, wise investors align their financial decisions with the current monetary policy of the Federal Reserve. Mortgage originators of all stripes did just that. Mortgage lenders certainly did. 

For the last two…

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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.


The HECM’s outlook to be shaped by 3 factors

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Three factors that will shape the HECM in 2020

What is presently shaping reverse mortgage production today, and what will influence our future?

First is the ‘feeder’ of all reverse mortgage endorsements. Before any federally-insured reverse mortgage is underwritten, has funds disbursed or is ultimately insured or ‘endorsed’ it begins as a case number- the identifier attached to every submitted HECM application. While most closely follow our monthly Top 100 lenders report, many are not looking at the leading indicator of future endorsement volume- Case Number Assignments– or perhaps a better term would be ‘reported applications’.

Case numbers aside the largest factor to influence future loan volumes is what HUD says or doesn’t say in the coming months. Traditionally August or September have heralded upcoming changes for the following federal fiscal year which begins each October. Will we see another round of cutbacks to the HECM’s principal limit factors, or another layer of loan requirements? While recent comments from FHA Commissioner Brian Montgomery show confidence in the improving financial health of the HECM program, there’s no denying the continued drain from previous HECM loans on the FHA’s insurance fund.

FHA’s 2nd Quarter report to Congress on the Mutual Mortgage Insurance Fund shows 2018 HECM claim payouts are on track to exceed 2017 by over


Examining the HECM’s Viablity

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Truth be told, the HECM is not the only loan that is dependent on the government

[Download transcript]

The United States is in the mortgage business and in a big way. I have had to repeatedly remind myself that Uncle Sam’s reach in mortgage lending goes far beyond Home Equity Conversion Mortgages. At times many reverse mortgage professionals may lament our industry’s near total dependence on the federal government when in reality the majority of the housing market is regulated and ultimately backed by the taxpayer. The HECM is no exception.

This point should not be overlooked when considering the recent news that President Trump issued a memoranda instructing the Department of Housing and Urban Development to report back on the financial viability of the HECM program. A proposition that has caused considerable concern. It’s not a shocking development being mindful the program has generated significant claims since being moved to FHA’s Mutual Mortgage Insurance fund in 2009. Subsequently, FHA officials have wrestled with just how to stop the continuous stream of…


2018 Year-End Thoughts

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Final thoughts on 2018

Merry Christmas and a happy new year from the team at Reverse Focus!


From Dependency to Diversification

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Not too many years ago there was a time when the typical reverse mortgage professional could confidently build their business on a singular loan; the Home Equity Conversion Mortgage. That business model has become increasingly difficult to sustain in recent years. While some continue to succeed only offering the federally-insured reverse mortgage, others have diversified their product offerings to buffer against continued cutbacks and requirements that have become the new norm for the federally-insured reverse mortgage.

While all mortgages are sensitive to current interest rates, the HECM has the added challenge of bearing the brunt of repeated and significant regulatory changes, underwriting standards, and mortgage insurance premium pricing modifications. It soon became clear that dependence came with a cost.
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Many can recall the irony of taking the required National Mortgage Licensing Safe Act exam whose questions that centered almost exclusively on traditional mortgage lending rules and terminology. Sure there may have been one or zero questions remotely related to the Home Equity Conversion Mortgage but many found themselves frustrated having to absorb a glut of information not remotely related to their origination practice. Who would have known this test would herald an upcoming seismic shift for our industry.

While those reverse mortgage professionals that began offering traditional mortgages enjoyed a more diversified business model they still found older homeowners struggling to tap their housing wealth without the burden of required monthly payments. While providing the means to generate an alternate income stream, the need to provide a viable alternative to tap into housing wealth remained. Fortunately, HECM lenders have launched several proprietary or private reverse mortgage programs this year that may provide some relief for originators and homeowners alike.

Several years ago the Federal Housing Administration stated their desire for a more robust private mortgage market that is less dependent on the backing of the American taxpayer. One could say the curtailment of the HECM and the expansion of private reverse mortgages has taken us one step closer to achieving that goal.