Reverse Mortgages Continue to Loom Large
How is it that NREP continues to plug reverse mortgages, to quote today’s message as “a goldmine”? HECM volume has dropped dramatically, less than 3,000 HECM’s closed in the entire country last month! We are at 2004 volume levels at the same time revenue per transaction is off by about 40% from last year. Our revenue on a reverse mortgage is about the same as on traditional mortgage transactions. There are way too many LO’s chasing financial planners and home health care providers. Traditional mortgages are much easier to sell and much more plentiful.
I’ve done 3 HECMs and it’s a matter of sheer luck how much $ you will make and it’s all based on the initial draw. If they take the entire Principal Limit, you can score big. If they take a line of credit and a minimal initial draw, you make very little. Of course, I always do my fiduciary duty to the borrower and go with what’s in their best interest, but it’s uncomfortable having that temptation to push for the max initial draw.
I live in an area that is 70% retired people and I find most of the responses are very good.
However, approximately 3 out of 5 are refi reverse mortgages, in that they want money to do other things with their equity, such as pay off bills, remodel, or whatever and stay right where they are. As a real estate agent in this area, I really love the product and the more I learn the more confident I am to educate elder seniors.
They are FHA loans and my lender said the underwriters are asking for a second appraisal on 20% of the homes. The cost of the reappraisal is another appraisal fee. Getting more expensive and the appraisals are coming in low.
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