After the eventful yr that was 2020 for the reverse mortgage business, it could be logical amongst some each in and across the business to count on a little bit of slowdown in normal enterprise exercise as a brand new yr arrives. After all, in addition to new realities on the fronts of coverage and the continuing battle towards the COVID-19 coronavirus pandemic in addition to the approaching change from a longstanding fee index, one may assume that every one of those elements would mix right into a slowdown of some sort.
This doesn’t seem like the case, nevertheless, based mostly on conversations had between reverse mortgage mortgage originators from across the nation and RMD. If something, many originators are reporting that their ranges of enterprise have solely risen for the reason that calendar modified over to 2021, and that elevated degree of enterprise was just lately mirrored in the publication of Home Equity Conversion Mortgage (HECM) endorsement information from January displaying that business quantity noticed its finest month for the reason that explosive tally seen in May, 2020.
To gauge what originators are seeing in their native communities, RMD went to mortgage officers throughout the nation to be taught extra about this early uptick in enterprise for the brand new yr.
‘Can’t write them quick sufficient’
In the New York space, enterprise has reached a excessive sufficient degree for one originator that he questions his personal velocity in responding to the wants of potential shoppers. This is in response to Tim Kennedy, director of enterprise improvement at U.S. Mortgage Corporation in Long Island, N.Y.
“The phone is ringing every day, I can’t write them fast enough” Kennedy tells RMD. “Increasing the lending limit has helped. Where I’ve had borrowers in the past that didn’t qualify or didn’t get enough money, I’ve now been able to call them back and rerun the numbers. What’s happening is they’re a year or two older, their house value has gone up a little bit more. Or, if it’s over the $822,375 they get that much more money.”
One of the ways in which a rise in the lending restrict has helped is that Kennedy is having extra conversations the place a borrower can select a extra useful choice between a extra conventional HECM, or a proprietary reverse mortgage product, he says.
“Now with the lending limit at $822,375, they’re talking about doing a HECM. Instead of taking all this money out on day one with the HomeSafe option, [sometimes they choose to] leave it on the line of credit and have the benefit of the guaranteed growth rate factor. They’re looking at both choices or both options, saying maybe the Home Equity Conversion Mortgage [is more beneficial] versus the jumbo, which is interesting.”
One of the issues these conversations talk to Kennedy is that the shoppers are much more dialed in to the specifics of what is going to doubtlessly impression them than some observers give the senior demographic credit score for, he says.
“They’re paying attention, they know how the product works and they’re not in the dark,” he says. “When I speak with these potential clients, they have a pretty good grasp on what the reverse mortgage is, how it works, and what exactly they want out of it. And then I just fill in the blanks, and whatever misinformation they may have, I correct it. But a lot of them, they’re pretty savvy.”
On the opposite aspect of the nation in the Pacific Northwest, enterprise steadiness has continued from the top of final yr in response to Brandi Braley, mortgage originator with Neighborhood Mortgage in Bellingham, Wash.
“Business has been good,” she says. “It’s been pretty steady all throughout 2020, and it’s just continued to roll into 2021. Things in our industry kind of slowed down a little bit at the end of the year, just because people are a little bit more into the holiday spirit, not much into worrying about a mortgage loan. But yeah, I’ve seen a real steady pace going into 2021, so that’s been really nice.”
The steadiness is attributable to a mixture of each new, incoming prospects in addition to some extra repeat prospects looking for a HECM-to-HECM refinance transaction, she says, since rates of interest are useful to a few of these looking for out a change to an current reverse mortgage, she says.
In phrases of the place issues stand in relation to the place they have been one yr in the past — simply earlier than COVID-19 was declared a pandemic by the World Health Organization (WHO) — extra financial considerations appear more likely to gasoline continued reverse mortgage curiosity in her neighborhood, she says.
“I think things are going to stay along the same lines,” she says. “I know that there’s still, as always, the need for reverse mortgages. But also, there’s more people that have been out of jobs, so if you’ve got anyone that was going into retirement and was still working and then maybe lost a job, this is probably going to be an option for them. So, I think we’re going to have people looking at [the product] in that sense. So, I think things are going to be pretty much the same as last year, I think we’re going to see the same trend.”
Faster decision-making from debtors
Up in Connecticut, one of many issues that appears to have modified in the early days of 2021 is the tempo at which shoppers make choices about what route they want to go into in regards to tapping their residence’s fairness. This is in response to John Luddy, SVP of reverse lending at Norcom Mortgage in Avon, Ct.
“People are making decisions faster,” Luddy says. “They’re not letting it marinate for as long as they used to. Maybe they have a greater sense of urgency because of the pandemic, but I’ve never seen so many adult children using powers of attorney to move forward on reverse mortgages.”
The pandemic has additionally spurred extra collection of proprietary reverse mortgages — or “portfolio” merchandise, as Luddy prefers to name them — to enter into the pipeline, he says. Unlike what’s being noticed by Mr. Kennedy in New York, the rise in the HECM lending restrict just isn’t dividing enterprise as a lot between HECM and proprietary because it comes right down to a query of different prices, Luddy says.
“The problem is that when you get to that high of a value, that initial mortgage insurance is so high that some people might use the portfolio product, just because it’s so much cheaper to get into,” he says. “And that’s regardless of whether it’s a $700,000 or $800,000 home. I haven’t yet experienced someone who’s been aided by the fact that [the lending limit is] now over $800k. And yet, there are places in Connecticut that have enormous home values, but most of our people are under the $700,000 range.”