Reverse Mortgage Volume Update
As the nation’s housing industry steadily chugs along the track to stability, there appears to be a resurgence in the popularity of reverse mortgages, which had dropped off following the housing crisis. Known as the Home Equity Conversion Mortgage or HECM program, it allows senior homeowners to take out a portion of their property’s equity. The homeowner has the choice of withdrawing the funds through a line of credit, in a fixed monthly amount, lump sum, or combination of all three. A recent story from the online site Reverse Mortgage Daily, or RMD, evaluated what’s been taking place within this sector of the lending industry.
For 2016, the volume of reverse mortgages was down compared to 2014 and 2015. However, over the last five years there have been a number of changes made to the program. Now that the new and improved reverse mortgage program is seen as a finished product, its popularity appears to be on the rise.
According to data from Reverse Market Insight or RMI, HECMs were down by 21 percent in the y-o-y analysis between January 2015 and January 2016. The number of HECMs for January 2016 was 3,890. However, in February of this year, these types of mortgages were up by 18 percent, which is just 3.5 percent lower than in 2015. The trend continued as March blew in with RMI reporting that in the third month there were 4,535 loans, which was just 2.3 percent lower than where they were in March 2015.
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The Future of Reverse Mortgages
In a HECM Trends report released by RMI, it was noted that, “HECM endorsements have been lower than 2014 and 2015 for each of the first two months (and March will continue that pattern), but the gap is at least narrowing.”
RMD constantly evaluates what’s been taking place within this sector of the lending industry. John Lunde, the founder and president of Reverse Mortgage Insight, was recently interviewed to discover his take on what’s happening within the world of reverse mortgage loans.
Lunde was asked if he sees 2016 as a year of potential rebuilding for the reverse mortgage program. He responded, “I think so.” He went on to explain that now that the changes have been officially made, including the program’s Financial Assessment, that recovery should begin for this sector of the mortgage market. Lunde noted that it will take time. He reflected about the current status of HECMs by saying, “We’re a different shape from last year-last year, the first months of the year were stronger and the last four months were weaker. This time, expect to start off weak and hope to finish the year strong.”