More than 160 reverse mortgage industry participants gathered in Dallas, TX, for the Texas Mortgage Bankers Association’s 10th Annual Reverse Mortgage Day to learn about the latest issues impacting lenders in the Lone Star State.
Despite being the last state in the country to start originating reverse mortgages due its constitution (yes, it has its own), business is booming.
During 2005, 2,654 loans were endorsed in the state and by 2009 volume was up 186% with 7,592 endorsements according to Reverse Market Insight. These numbers put Texas as the third largest state in terms of units, behind only Florida and California. The number of lenders doing business in the state continues to grow as well. In 2005, only 63 lenders were doing business in the Lone Star State but by 2009 it grew to 213 active reverse mortgage lenders.
Even with the growth, the “unscrupulous” lender problems that other parts of the country have experienced haven’t happened. According to the Texas Department of Savings and Mortgage Lending, there has not been any enforcement actions involving reverse mortgages in the last five years.
“What we’ve done here in Texas is working”, said Scott Norman, originator for MetLife and President of the TAMB during his opening remarks. “In the last five years, we haven’t had many evil doers and the people in this room are the ones who are doing it right.”
Despite the clean record, Norman insisted it must continue to keep an eye on the industry because it’s not the time to slip up. The TMBA is working with state legislators to amend the Texas Constitution in order to bring the HECM for purchase to the state. Current law requires that borrowers have equity in a homestead before obtaining a reverse mortgage. If all goes well, Norman said the state could allow reverse mortgage borrowers to use the HECM for purchase in January 2012.
Why Are Companies Looking to Texas for Growth?
Spend anytime in Texas you will quickly learn that residents are very optimistic about all things in their state, but in respect to reverse mortgages, they have good reason. Due to the conservative nature of legislators in the state and restrictive home equity lending (max LTV of 80%), Norman said Texas was saved from a lot of the pain that other states went through.
“So even if borrowers home value has dropped a bit, there is still equity there,” he said. “Texas is a very unique place, where your house is your home. It’s a bond and a long term investment, people do not buy homes here to flip them like they do in other parts of the country.”
All of these reasons are why so many companies from outside of Texas attended the conference in Dallas. Many feel that reverse mortgages in Texas will eventually grow larger than Florida and Texas. While proud of the fact the reverse mortgage industry is already a billion dollar business in the state, in true Texas fashion Norman encouraged anyone looking to expand their business to “come to Texas, we’re just getting started.”
Note: Scott got engaged last week as well, so from us here at RMD, congrats!
