Jan-Feb2020

REVERSE MORTGAGE LENDING in the Mid-Atlantic hit a fresh low in 2018, largely due to new federal standards that put Home Equity Conversion Mortgages (HECMs) out of reach for many would-be borrowers. But lenders have cause for optimism. They are encouraged by growing acceptance of reverse mortgages, especially among financial planners, for instance, and an aging population that likely will need to lean on home equity in their golden years. Lower interest rates and higher home values also are contributing factors. And given all the companies that have exited the reverse mortgage business over the last few years, the shrinking volume overall is not a prime issue for those that remain. They are focused instead on borrowers who continue to see home equity as an arrow in their retirement quiver and on new proprietary products that afford more options for doing so. And business may be looking up—finally. “We’re seeing a slight uptick. I wouldn’t call it an increase just yet,” says George Morales, HECM business development manager for Primary Residential Mortgage Inc., which is based in Salt Lake City, UT, but has offices around the country, including in the Mid-Atlantic. “Consumers are starting to finally take a look at it. They’re just not pulling the trigger on it as quickly as the industry would have expected.” Those consumers break down into two camps: those who continue to tap into the HECM as a financial lifeline of last resort and others who see it as part of their overall retirement plan. In the Mid-Atlantic, the latter are likely to be found in areas with high home values around large cities, such as Baltimore, Philadelphia and Indianapolis. “They’re the ones who don’t need to borrow against their equity, but they would like to,” says Morales, adding that such consumers typically use the money to make large purchases or to furnish the lifestyle they desire. “They don’t care about not having a mortgage payment.” Reverse Mortgage magazine is defining the Mid-Atlantic states to include Delaware, Indiana, Kentucky, Maryland, Ohio, Pennsylvania, Virginia and West Virginia, as well as Washington, DC. Most of the states saw volumes continue to slide in 2018, though some had registered slight upticks between 2016 and 2017. Pennsylvania, the sixth-largest state by population, saw its HECM endorsements rise about six percent, going from 1,336 loans in 2016 to 1,418 in 2017, according to data from Reverse Market Insight. But the total fell to 1,083 in 2018. The state hit a peak of 3,989 in 2008. Among the factors weighing on the Keystone state market—as well as most others in the United States—are the 2017 changes to HECM standards for borrower qual- ification, says Dennis Cronin, a reverse mortgage profes- sional with American Advisors Group in Lancaster, PA. While the changes have kept many borrowers out of the market, other consumers are showing more interest A Rebound Afoot Industry Trends Have Lenders Seeking New Products and Markets in the Mid-Atlantic By Joel Berg REVERSE MORTGAGE / JANUARY-FEBRUARY 2020 29