The Changes to Reverse Loans

As I mentioned in the previous post, effective on September 30th. the Reverse loan program will immediately undergo some major changes.   Primarily, less money to the applicant and possibly an increase in the MIP premium.   There are several changes that will take place at the end of the month, with the remaining one effective in January 2014.

The following article concerns a panel of experts in the Reverse mortgage industry that recently met, to discuss these changes and what they mean overall, for the industry.

Reverse Mortgage Industry Faces New Challenge
Posted By Alyssa Gerace On September 12, 2013 @ 5:07 pm In News,Reverse Mortgage | 13 Comments

“Upcoming changes to federally-guaranteed home equity conversion mortgage program will change not just the product itself, but the type of borrower using it, said panelists during a Wednesday webinar on the topic, and there are opportunities amid the overhaul.

“The reality is, we need to change how we do this business,” said John Lunde, founder and president of Reverse Market Insight, during the webinar, hosted by ReverseFocus. “There are several big opportunities out there that our industry has not really attacked, and effectively gotten a lot of volume out of. The HECM for Purchase is probably one of the biggest ones… Financial planners [present] an enormous opportunity, even bigger than Purchase.”

Pursuing those opportunities will be imperative, he said, considering how the new HECM rules could affect future loan volume.

RMI took a look at funding activity from July and August to see how those loans would have been impacted had the new rules already been in place.

For the July/August book of funding, the total impact from the upcoming October changes—lower principal limit factors and restrictions on initial utilization—but ignoring the January financial assessment implementation would have seen a 49% unpaid principal balance reduction.

“That’s a shocking number,” said Lunde. “It’s bigger than any other changes we’ve seen. This underlines that we need to go out and change everything, from marketing to how we approach business. It’s going to be a different business going forward. That’s the bottom line.”

This is a long article that I will continue to post over the next few days.

 

 

 

 

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