Changes for Reverse Loan in 2013

Here is a continuation of the article concerning the pending and as of yet, not entirely known upcoming changes that will effect Reverse mortgages options.

January 13th, 2013 | by Elizabeth Ecker Published in FHA, HECM, News, Ocwen, Reverse Mortgage, RMS, Security One, Walter Investment | 10 

“Last year proved a struggle for the overall industry loan total, which amounted to just shy of 55,000 loans for the fiscal year ending September 30. The downturn from 2011’s total of more than 60,000 loans is attributed largely to the exit of MetLife from the reverse mortgage business, as well as sustained low home values nationwide.

The peak year for reverse mortgages, however, saw a total of more than 100,000 loans, and this at a time when there was no fixed rate option for borrowers. There’s confidence in the market that the adjustable rate product is a viable one, but it will prompt change in terms of marketing and product economics, with originators having to shift accordingly.

“It will have an indirect impact because it will reduce revenue on the average loan that is available for marketing,” Lunde says. “If originators are not able to market cost effectively at the lower revenue levels of ARM product, then we’ll see fewer loans if all else is equal.”

Lenders have supported the change with a statement of support coming from Walter Investment Group—owner of Reverse Mortgage Solutions and Security One Lending—following the letter from Galante, who has since received Senate support for confirmation as FHA commissioner.

“We are very much in favor of changes in the reverse market that make marketplace stronger for the long term,” said executive vice president Denmar Dixon on a call with investors in late December. “We see significant growth in the base market overall not affected by this change, since there are other products available to address the need.”

In spite of the current product balance and having to make changes in terms of product marketing, independent lenders too say that long-term, the modifications will be welcomed. “The changes to the program that are coming from HUD are good,” says John Mitchell, founder and CEO of Reverse Mortgage USA. “It solidifies the program long-term.”’

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