Reverse mortgages do not expand the mortgage business



According to the data, the reverse mortgage sector remains strong, accounting for over 4,000 loans per month. Reverse mortgage dailyHowever, further business development was delayed.

The publication cited recent remarks made by John Lunde, President of Reverse Market Insights, at the National Association of Reverse Mortgage Lenders’ Virtual Summer Meeting. He explained that the penetration of reverse mortgage products has decreased over time due to two key metrics, according to RMD.

“Nobody wants their market share to decrease,” Lunde said, according to the RMD report. “But when we really start to dig a little deeper into it, we see that both numbers involved here are moving against us. The number of HECMs in service portfolios has been on a downward trend, mainly since the Major Limiting Factor (PLF) changed in 2017. At the same time, we continue to see an increase in the number of households eligible for housing by age. So, for both of these reasons, we are actually seeing a decline in penetration. “

“In general, one of the things that has happened a lot lately and over the past few years is the loans to the FHA,” Lunde added. “It doesn’t really exclude them from the penetration equation. If we think of loans coming out of the service portfolio, yes, they are coming out of the lender’s service portfolio, but they are really just going into the FHA service portfolio. One of these large numbers does not actually reduce penetration, but at the same time we think about “how do other, different factors manifest?” We are now seeing very low interest rates and are sharply increasing house prices. “

Lunde also commented that in terms of refinancing, the reverse industry is just getting loans, however, they are not adding new clients as an industry. He believes that while the industry is better at serving the existing flow of customers, it is not doing enough to raise awareness of the product.

Find out more about why the increase in refinancing activity and low interest rates were not enough to grow the reverse mortgage industry.


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