Despite Data, Originators See Little Change in HECM Borrower Age

Recent data indicated that fewer younger borrowers are opting for reverse mortgages, but this age shift has not been noticeable for many originators nationwide.

A recent report from Baseline Reverse looked at loans funded in January and pooled in February — which consisted of both Home Equity Conversion Mortgages originated under the new, lower principal limit factors enacted last fall and loans with the old PLF structure. Among the new-PLF loans, there were fewer borrowers aged 74 and under.

“The lower PLFs may make it harder for younger borrowers to qualify,” Baseline Reverse founder Dan Ribler told RMD earlier this month, though he added that it was still early to draw concrete conclusions about borrower age under the new structure.

Ellen Skaggs, the reverse national sales manager with New American Funding in Tustin, Calif., said that she has not observed changes in the ages of borrowers — but she has had more younger prospective borrowers inquiring about the loans.

“I do see the younger borrowers in their earlier to mid 60s investigating the prospect of the reverse mortgage,” Skaggs said.

Jesse Brewer, a reverse mortgage specialist with Resolute Bank in Nevada, said he has not seen a noticeable decline in borrowers under 75 years old.

“I haven’t noticed a change one way or the other with regards to age, or I at least haven’t had the volume to get a gauge on that data point,” Brewer said.

For Tim Linger, broker and owner of HECM Senior Home Financing in Orlando, Fla., the recent data is “100 percent true” for the borrowers he has recently encountered. Linger, who deals mostly with HECM for Purchase transactions, said higher closing costs and lower loan-to-value ratios have made younger borrowers turn away from the HECM.

“They look at the math and the closing costs, and I really have a tough time arguing with them,” Linger said.

But Malcolm Tennant, president of Access Reverse Mortgage Corporation, said the changes he has observed in borrowers have not been age-related.

“I have not noticed (age) particularly, but I have noted a higher proportion of need-driven inquiries or interest versus financial planning-type inquiries,” he said.

Skaggs agreed that she also perceived changes unrelated to age —  specifically a product shift toward HECMs for Purchase, as well as fixed-rate reverse mortgages becoming better options.

Written by Maggie Callahan

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