RMD Report: Originators Sense Turnaround Underway for Reverse Mortgages

On the heels of the lowest annual reverse mortgage volume recorded since 2005, originators say that based on January business activity, they are sensing an upswing is under way.

Despite not having accurate data due to the longest partial government shutdown in American history, reverse mortgage originators across the country noted increased activity in their offices in the forms of product inquiries and active communication lines throughout the year’s first month.

That increased activity has some originators feeling that there could be a possible turnaround in reverse mortgage volume coming off of the historically-low volume seen in 2018, which saw only 48,359 loans having been endorsed over the fiscal year.

“No question there has been increased activity,” said Malcolm Tennant, president and co-founder of Access Reverse Mortgage Corporation in Clearwater, Fla. “In my case it seems like a number of ‘tire-kickers’ from past years have come back to life.”

For others, an increase in activity means having a more active telephone line that sometimes leads to business, but also illustrates an increased level of product awareness.

“January was an interesting month. I saw a lot of activity with people calling to look into reverse mortgages,” said Brandi Braley, an originator with Neighborhood Mortgage in Bellingham, Wash. “The increase in activity was a nice change from December. I have had a few people request to go forward since the first of the year, but I don’t think it had anything to do with people acclimating to the changes.”

Braley said she doesn’t feel like the public is particularly aware of changes made to the HECM program over the past 16 months, but that the need for the product is simply being reinforced as potential borrowers are forced to explore their financial options.

“I feel that this increase is just due to the fact that more and more people are running out of funds and have so few options, so they are turning to reverse mortgages,” she said.

A general feeling of optimism for 2019 is directly fed by the way the year has started for Chris Mayer, CEO of Longbridge Financial.

“I think we’ll see progress on HECM since people continue figuring out how to make the economics work,” Mayer said in a recent webinar hosted by RMD. “We’re all feeling pretty good, but I think there’s a lot of opportunity in 2019, and I’m happy with the way it started.”

Others expressed that while January may have shown a more incremental level of improvement, 2019 has still managed to kick off in a more positive way compared with the end of 2018.

“I would say business is still not where it should be, but it is a bit better after November and December,” said Michael Mazursky, owner of iReverse Home Loans Corporation based in Hunt Valley, Md. “I find the holidays are usually a slower time as far as originating new loans. We have been able to get new applications in after the New Year, but I would say it’s still too soon to determine if there is any significant uptick in volume.”

While Tennant feels optimistic, he still acknowledges that there are remaining issues that need to be taken into account for 2019 to be generally more prosperous than 2018.

“The low interest rates have a positive impact, but the [program] still faces a lot of headwind with the lower PLFs and lack of flexibility in closing costs,” added Tennant.

This edition of the RMD Report is sponsored by national appraisal management company Class Valuation.

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