Reverse Mortgage Trends

j04013731.jpgSince being in the reverse mortgage industry for nearly three years, it is amazing to see how much it has grown . . . . .  and do believe we are in major growth spurt within the industry. 

At that time, these things were true:

  1. There were just a couple of major lenders of reverse mortgages. Wells Fargo, Financial Freedom, JB Nutter, and Seattle Mortgage, and some smaller lenders.
  2. Financial Freedom was the largest reverse mortgage lender
  3. The only product choice was the HECM Monthly and HECM Annual, as well as some proprietary products, mostly used in the Jumbo market.
  4. Reverse mortgages were mostly unknown in the lending and financial industry. Many professionals were not familiar with them. And even at that, they were largely misundersood.
  5. Reverse mortgages were largely sold to Fannie Mae.

Today, we live in a much different climate. Here are some of the things that are current today:

1. Wells Fargo leads the list of lenders who have done the most reverse mortgages with 21,893 in 2007 while Financial Freedom is now the second largest lender at 10,919. Bank of America (formerly Seattle Mortgage) jumped into the market this year, closed just over 2,600 reverse mortgages for the year. In addition, Countrywide Bank, one of the largest lenders in the country, jumped into the reverse market closing 1,115 reverse mortgages in 2007.

2. There is a myriad of HECM products including fixed rate, and libor based products. These products provide the borrower with more options in order to satisfy their long term objectives combined with interest rate flexibility.

3. Reverse mortgages are becoming common language among financial professionals, mortgage planners and seniors themselves. The reliability of the product coupled with an industry that strives to be integrity based, has allowed many to develop a trust that is needed in order to move forward in serving seniors and their families.

4. The secondary market is becoming more engaged with reverse mortgage loans. Ginny Mae has grown in their acceptance of reverse mortgages as they have created a HECM Mortgage backed security (MBS). According to Tom Geggel, a senior analyst with Callahan and Associates, Inc., “the move signifies the growing popularity of the reverse mortgage product and increases liquidity options for lenders.” You can read his article from CreditUnions.com “Reverse Mortgages Gaining Market Acceptance” for more insight into this trend.

Where reverse mortgages once were seen as a financial product for the lower class, they are becoming more and more of a tool used by people among all economic classes. Tax benefits, liquidity, cash flow, capped with a virual risk free solution, has come a long ways.

Though the list above is only a few of the trends that I have witnessed over the past few years, they will continue. Reverse mortgages will be a common retirement tool for millions of seniors in the future.

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