MortgageOrb recently sat down with Marc Helm, COO of Reverse Mortgages Solutions to discuss the state of the reverse mortgage business. During the interview, Helm discusses the secondary marketing potential for reverse mortgages and the new interest from insurance companies. Below is a quick snapshot of a portion of the interview.
Q: How do you see the state of reverse mortgages in 2009? Do you see the market expanding – and, if so, which regions will see the greatest growth?
Helm: The reverse mortgage market has been solidly successful since its inception and will continue to expand at a measured pace this year, limited by fewer warehouse lines and investors. Even Fannie Mae may tighten its purchases of the product, from years past. Offsetting this, Ginnie Mae is becoming a bigger player on the securitization side of the transaction.
The growth regions reflect demographics – larger states with stable or enlarging senior populations will experience the most reverse mortgage growth; that’s California, Texas and Florida, to name the top three. New, higher loan limits will serve to prime the pump in those states.
Q: What are the current secondary marketing potentials for reverse mortgages?
Helm: Beyond the new Ginnie Mae involvement, there is new interest in the sector coming from life insurance companies, which are typically cash-rich and now perceive the reverse mortgage product as a hedge against their traditional policy-customer model. For these companies, one investment (reverse mortgages/rising valuations) would earn as the other (life insurance) runs against aggregate assets.
So, an insurance company generates revenue (on its life insurance portfolio) and then can invest in appreciating assets that will later pay insurance beneficiaries when policyholders die. Additionally, they may sell seniors other long-term products, such as long-term medical care, which would be profitable for a young senior (i.e., 62 years old). Overall, the entry of these life companies spells more money for the reverse mortgage business and more players.
To read the rest of the interview, check out the link below.