Taking Account continued on page 20 The housing crash and Great Recession of 2008 and 2009 proved something of a mixed bag for the industry. The financial troubles coincided with the first wave of Baby Boomers to turn 62 years old, a turning point that meant a larger market for HECMs. In 2008, meanwhile, HUD introduced the HECM for Purchase, a product that has proved especially valuable to a segment of older borrowers. Reverse lenders, however, faced challenges in funding loans as the crash dried up warehouse lines, impacting HECM originations, Lawler says. Several high-profile lenders, such as MetLife and Wells Fargo, decided to exit the reverse business, further hampering originations. The reverse mortgage market bounced back over the next five years, Lawler says. People who had been employed by lenders that left the business found their way to other companies. But then came the introduction of the financial assessment, which required a closer look at borrowers’ ability to keep up with their property taxes and insurance payments. The changes slowed growth for HECM originations. A countervailing force came in 2017, when HUD began instituting annual increases in the HECM lending limit. The limit, which had been fixed at $625,000 between 2009 and 2017, is now over $1.1 million. The COVID-19 pandemic in early 2020 threw another curveball at the industry by making it harder for reverse originators to meet with their clients. The crisis did have an upside—hastening the adoption of new tools for marketing reverse mortgages, educating borrowers and processing loans. In response to the economic toll of the pandemic, the Federal Reserve lowered interest rates, which created several repercussions for the mortgage industry. Low rates prompted a wave of refinancing for forward and reverse mortgages. They also contributed to a run-up in home prices, which meant homeowners had more equity to tap when they opted for reverse mortgages. Reputational Roller Coaster Reverse mortgage lenders have long worked to improve the reputation of their product. Over the years, they have employed high-profile, trusted spokespeople, ranging from singer Pat Boone to actor Tom Selleck. Lenders also have worked hard to cultivate financial planners, many of whom are open to considering reverse mortgages for their clients. “The value of the reverse mortgage is working in concert with an overall financial plan to solidify their plans against the inevitable bumps in the road that could happen and give them more flexibility and confidence in their future,” says Clay Selland, CRMP, president of Signet Mortgage Corp. in San Ramon, CA. Nonetheless, reverse mortgages often mystify borrowers, and a burst of negative publicity in the late 2010s further complicated the marketing picture. The Clay Selland “The value of the reverse mortgage is working in concert with an overall financial plan to solidify their plans against the inevitable bumps in the road that could happen and give them more flexibility and confidence in their future.” —Clay Selland, CRMP, president of Signet Mortgage Corp. REVERSE MORTGAGE / JANUARY-FEBRUARY 2024 19
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