Reverse mortgage “survivors” are now “feasting” on the market share left by Bank of America and Wells Fargo, abating concerns over liquidity in the market, National Mortgage News reports. The publication spoke with executives from Generation Mortgage, One Reverse Mortgage and Reverse Mortgage Solutions to gauge their strategy on growing into the newly abandoned space and potential hangups that could weigh on production in 2012.
National Mortgage News writes:
“The industry is facing challenges that are dampening production,” [Generation Chairman Jeff] Lewis said. Chief among them is FHA’s decision to introduce credit underwriting to the reverse mortgage business in an effort to stop “technical” defaults where seniors can’t keep up with their homeowners insurance payments or local real estate taxes.
FHA reported nearly 8,000 technical defaults in FY 2011, resulting in insurance claims rising 48% from a year earlier. Technical defaults can lead to foreclosures.Traditionally, reverse mortgage lending is based solely on the asset value of the house. Later this year, lenders will be required to collect income and expense data, evaluating a senior’s financial ability to pay insurance and taxes.
“There has been a perception that the HECM product was only for people without any other financial alternative,” Lewis said. With the introduction of new underwriting criteria, such seniors “may have trouble getting” an FHA-insured reverse mortgage, he said.
…One Reverse Mortgage president and chief operating officer Gregg Smith estimates that B of A and Wells Fargo controlled 30% of the retail reverse mortgage market. ORM is the reverse mortgage arm of Quicken Loans, Detroit, the nation’s eighth largest forward lender.
ORM’s strategy is to target potential bank customers who previously would’ve obtained credit from Wells or B of A. “That will take time,” Smith told NMN.He noted that reverse mortgage loan officers at the two banks have the contacts but have been exempt from state-licensing requirements.
Read the full article on National Mortgage News.
Written by Elizabeth Ecker
