Magazine article American Banker

Reverse Mortgage Trend Line Drops

Magazine article American Banker

Reverse Mortgage Trend Line Drops

Article excerpt

Byline: Lew Sichelman, National Mortgage News

After a banner year, reverse mortgage production has fallen sharply this year, according to figures released last week by the Department of Housing and Urban Development.

In the government's fiscal year that ended Sept. 30, lenders wrote a record 114,641 HUD-insured reverse mortgages. For the first six months of the current fiscal year, originations totaled 41,375. At that pace, production for the year would be about three-quarters what it was the year before.

Erica Jessup, the housing program policy specialist in HUD's office of single-family housing who runs the Home Equity Conversion Mortgage program, said the lending pace has slowed every month since November.

In March, 5,800 reverse loans were originated, an annual run rate of fewer than 70,000, Jessup said at a National Reverse Mortgage LendersAssociation conference in Philadelphia last week.

Part of the fall-off, she said, is directly attributable to the fact that HUD on Oct. 1 effectively reduced the amount that senior citizens could borrow against their homes by roughly 10%.

Also, appraisals are coming in lower now than in previous years, meaning owners have smaller nest eggs to borrow against, Jessup said.

And like the trade group that held the conference, the HUD official attributed lower production figures to consumer misunderstandings, a fact she said is brought home to her by the number of complaints and questions she fields as HUD's "point of contact" for origination inquiries. …

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