Here is the final section of this article that was recently published.
January 13th, 2013 | by Elizabeth Ecker Published in FHA, HECM, News, Ocwen, Reverse Mortgage, RMS, Security One, Walter Investment | 10
“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.
“We believe the fundamentals are as strong as when we first looked at the market,” Walter executives told stakeholders in December. “The demographics are very much in favor of this product. There is still significant level of equity in homes that can be addressed by the reverse product and it is still very underpenetrated.”
Outside influences are likely to push the business forward in 2013, analysts say.
“The population is increasing at a rapid clip,” says Doug Kelly, IBISWorld analyst. “The demographics are the most favorable growth opportunity for the industry. There may be concerns among smaller lenders about higher regulations, but they will lead to greater transparency.”
Kelly projects the business seeing an uptick in 2014, once the housing market recovery takes hold.
“Over the five years to 2017, IBISWorld anticipates that seniors and financial advisors will increasingly take out reverse mortgages as a viable financial planning tool to cover higher living and medical expenses and make up for the gap left by poor performance by retirement income alternatives such as retirement plans and interest income,” Kelly wrote in an industry report published in December.”
Written by Elizabeth Ecker