Market Downside = Opportunity

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Opportunities are Created in a Down Market

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Reverse Mortgage Lending Blog It’s been a double hit for many. First the elimination of the popular federally-insured Standard fixed rate product in April and this month…the elimination of all existing products for one with first year restrictions on distributions. It’s a new age in reverse mortgage lending. One where competition is down and opportunity is up for those who adjust to the new product environment. The immediate impact of product eliminations is being felt as endorsements were down 16% after the April 1st elimination of the Standard Fixed Rate. What will our numbers look like three months from now for loans closed post October 1?


Those impacted the most in the wake of the Standard Fixed Rate elimination are those whose business model was heavily vested in fixed rate loans. Those with more a more diverse source of loans faired better…

BREAKING: New PLF Tables Published

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Reverse Mortgage Lending Ratios
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When HUD released their expected changes to the Home Equity Conversion Mortgage Program (Mortgage Letter 2013-27), or the federally insured reverse mortgage many asked “Where are the new lending ratios?”. Well the new Principal Limit Factors are here (download PLF Factor Table here).

Important Points to Ponder:

  • Many expected (myself included) that HUD would split the difference in lending ratios between the Standard and Saver. That is not the case. HUD has basically given us a Saver with a graduated upfront Mortgage Insurance Premium based on the percentage of available funds used in the first year. Basically the new Stand-Alone HECM gives 15% less than the standard across all ages and .6% – 8.2% than the Saver based on age.
  • **High Interest Rates spell trouble above 10%. This has been the case since the October 2010 PLF table update but is a little known fact. HUD says that it is not financially feasible to offer HECMs if interest rates reached 10% or higher and reiterates this point in their latest PLF Factor Tables.
  • The product is still viable for those working with financial professionals. While the Saver will cease, it’s introduction opened up the door of using the HECM as a legitimate planning tool. Despite higher upfront MIP charged for those only seeking a line of credit the costs are still negligible and the lending ratios still support a robust line of credit.

August Top 100 Retail HECM Lenders Report.

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Download your August Top 100 Retail HECM Lenders Report Here.

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August Top 100 Retail HECM Lenders Report

The top ten lender positions remain relatively unchanged while Nationstar broke last month’s top 10. In the wake of consolidation and acquisitions it appears that the largest lenders have firmly established their positions. What remains to be seen is the lender specific effects due to the upcoming elimination of the Standard & Saver products and the introduction of a new replacement HECM loan.