REVERSE MORTGAGE INFORMATION: Tools, News and Resources to Help Seniors Decide

We came across this table that was part of a presentation at the Mortgage Banker’s Association 94th Annual Convention. The table shows, by borrower age, the cause for HECM reverse mortgage loan payoffs.

We’ve previously written about the surprising fact that the majority of HECM loans are paid off within seven years. This chart expands on this showing the general reasons why HECM loans are paid off.

Most notable is the fact that less than 1/3 of HECMs terminate due to death. Overall, the vast majority of HECMs terminate because the borrower sells and/or moves out – not because the borrower dies while living in their home. (more…)

Much has changed over the past year in the HECM loan market: Florida has taken over from California as the reverse mortgage activity “hot spot” in the U.S.; new products like the HECM 100 and HECM 125 have emerged, and the overall volume of HECM loans has increased substantially. We thought it would be interesting to track HECM market changes in each of the locations that HUD processes home equity conversion mortgages.

The following table shows, for each location, the absolute change in HECM volume and the change in market share. Time periods used for comparison are the 12-month periods ended 10/31/07 and 10/31/06. Most of the significant changes reflect the emergence of Florida HECM activity and the corresponding declines in California HECM activity that we’ve noted before. But some other interesting points emerge as well: (more…)

Our prior use of a “heat map” showing Home Equity Conversion Mortgage Growth in U.S. States was well received by visitors so we thought we’d make it a monthly feature using data from HUD’s monthly HECM activity reports.

The map below is based on percentage changes HECM growth rates for the 12-month period ended 10/31/07 compared with the 12-month period ended 10/31/06. RED, ORANGE, and YELLOW states all had HECM growth rates exceeding the national average while BLUE and GREEN had growth below the national average. More detailed color code descriptions are included below the map:

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October HECM activity rebounded somewhat from the sharp falloff seen in September, but remained well below the 12-month average. According to HECM MIC reports recently issued by HUD, 8,417 HECMs were endorsed in October, a 9% increase from September’s total of 7,695. But the October total fell about 6 percent under the 12-month moving average of 8,938 monthly HECM endorsements and was, surprisingly, about four percent lower than the 8,789 HECM’s endorsed one year ago in October 2006. (more…)

Recently, we’ve spent time catching up on some reading. There have been a number of good articles on reverse mortgages published recently by respected sources like Kiplinger and others. A new book on reverse mortgages (The Complete Guide to Reverse Mortgages), has also hit bookstores within the last couple of months and we’re now in the process of reading it. The recent boom in reverse mortgage growth has definitely spawned a spin-off boom of new literature targeted at seniors wanting to learn more about this “new” retirement financing tool.

Most of the reading materials we’re seeing are accurate, even-handed and clearly written.

But we can’t help noticing that they all are missing some extremely important information about reverse mortgages. In fact, in the materials we’ve seen, we don’t recall seeing even a passing mention of this information – information that we believe is absolutely crucial for anyone considering a reverse mortgage to be aware of. (more…)

We put together a “heat map” of the 50 states to highlight how widely HECM activity varies across the nation. States in blue and purple are “cooler” HECM markets while yellow, orange and red represent hot areas of the country.

The map is based on a comparison of each state’s 2007 HECM activity (through nine months) to 2006 HECM activity for the full year. While this is not an “apples-to-apples” time-frame comparison, we feel it provides a means to highlight areas where HECM growth is strongest. Markets that have equaled or exceeded the prior full year’s production in just nine months are obviously HOT. (Overall, U.S. HECM endorsements through September 2007 are just 2% lower than HECM production for all of 2006: 83,596 vs 85,639.) (more…)

For years, California has dominated the reverse mortgage scene accounting for nearly one-third of the total HECMs endorsed as recently as CY2006. Figures through September 2007, however, show that HECM endorsements in the Golden State have fallen sharply when viewed as a percentage of the total HECM activity.

Florida HECM production, meanwhile, continues to be strong and growing in 2007. Indeed, Florida appears poised to surpass California as the top state for HECM endorsements. (more…)