Why are reverse mortgage lenders having a difficult time promoting the HECM product at a time when current interest rates allow a borrower to receive the maximum funds available under the program?
In an article in National Mortgage News, Jeff Lewis, Chairman of Generation mortgage suggests that "naysayers...have succeeded at really casting a pall of negativity at what is a phenomenal proposition for the borrower.”
Given that many originators are offering the product at or near the floor principle limit factor rate of 5.06% and that the lending limit is likely to be reduced in October, both Lewis and Mark Hem, CEO of RMS expressed surprise that HECM volume is struggling to gain positive growth.
Helm is quoted, “If you had asked me a year ago, with the new loan limits and the lower interest rates, I would have thought business would be booming right now. I think what people have underestimated is the cautiousness of the baby boomers.”
Lewis also suggested that anti cross-selling provisions are preventing "intelligent discussions" about how a reverse mortgage can work in concert with appropriate other financial products to meet seniors needs in retirement. Although there are important protections in the provision, they have gone too far in limiting how reverse mortgages should be integrated in the overall retirement picture.
Still, Helm expressed confidence that the reverse mortgage business will regain momentum as the population ages and needs continue.