If we could really see into the future, we’d all be filthy rich – not to mention happier and healthier – the result of always having winning lottery tickets and avoiding every failing that might come our way. But unable to truly know what lies ahead, we do the next best thing: guess.
Reverse mortgage practitioners are doing just that for 2010 and what the new year will bring to their small part of the housing finance world.
One of those, prolific in his comments but shy about being identified, sees opportunity ahead – at least for those still in business. “As many originators leave reverse mortgages, those that remain stand to benefit increasing their market share,” he says. “This means despite falling home values and rising interest rates, hard-working, professional originators should be able to not only survive 2010, but make modest gains in market share and overall loan originations.”
One fly in the ointment could be increased federal regulation. “An amendment to the Consumer Financial Protection Agency will lead to additional regulations for the origination of reverse mortgages, within one year of the creation of the agency,” this originator believes. The good news? “States may not feel as aggressive in creating more state regulations that duplicate or add another layer to existing federal regulations.”
There will be more adjustable rate HECMS, according to our veiled commentator. “As interest rates rise, the initial and actual interest rate will rise for the fixed-rate HECM. This means the gross cash benefit will be less with the fixed product once the fixed-rate exceeds the current ‘expected’ rate of the adjustable products.” (As an aside, Bank of America released a fixed-rate product last summer. Up to that point, all its originations were adjustable-rate products.)
Underpinning all reverse mortgage products will be home values, which this originator says, “have been artificially inflated by stimulus plans and tax credits. Look for some stabilization by the end of 2011,” he predicts.
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade. He can be reached atnmorse@reversemortgagedaily.local
