Here is the third part of an article discussing the pending changes to the FHA Reverse Loan program.
January 13th, 2013 | by Elizabeth Ecker Published in FHA, HECM, News, Ocwen, Reverse Mortgage, RMS, Security One, Walter Investment | 10
” The secondary market for reverse mortgages has been strong over the last 18 months, and the business got a real shot of liquidity when Walter Investment Management and Ocwen announced they would get into reverse mortgages. This week, Walter also announced it would be acquiring Security One Lending in an all-cash deal.
The introduction of big balance sheets to the landscape which formerly comprised just a handful of lenders led by Urban Financial Group and Reverse Mortgage Solutions is a very positive change.
But while HMBS traders say there is always demand for Ginnie Mae reverse mortgage securities, there is some concern that volume could suffer, impacting demand in the year to come.
“Volumes continue dropping, but with greater velocity and this ultimately affects sponsorship in capital markets,” says Jeff Traister, managing director for Cantor Fitzgerald. “With smaller volumes, there is less incentive for Wall Street traders and investors to focus. This affects liquidity and pricing to originators. This behavior takes time to filter through the system but is likely to occur.”
In 2013—and beyond
Ultimately, the outlook is strong for the market despite the upcoming change, supported in large part by a rapidly growing demographic of people who are 62 and older in the United States as well as home price recovery expected to continue through 2013 and beyond.
Up more than 4% in 2012 according to the housing industry benchmark S&P/Case-Shiller index, home prices will be the key to forward momentum, with the demographics only getting stronger in 2013.
Those factors will outweigh the short term change, according to industry leaders.”