Jan-Feb2020

in the product. “It’s like the whole thing has flipped, and this is not just in Pennsylvania, but across the board,” adds Cronin. “You see more affluent, highly educated people with higher property values doing HECMs. Going back ten or 15 years, you saw people in foreclosure who were in desperate situations.” Another change, Cronin says, has come among financial planners and other professionals who advise people in or near retirement. Those advisers once shut down clients who wanted to talk about reverse mortgages, he says. But they are now more willing to entertain the option. “I’ve been trying to educate for quite some time about this. We are seeing it open up some,” he says, noting that he has gotten at least two referrals lately from financial advisors. He also has seen growing interest in proprietary products in the jumbo market for higher-value homes. Cronin says he worked with a borrower in the Harrisburg, PA, area who stood to draw nearly $1 million in home equity— more than the roughly $730,000 the borrower would have gotten from a traditional HECM. The borrower’s house was valued at $2.6 million. “He didn’t want to mess with a HECM,” Cronin says. Cronin says he has made fewer inroads among real estate agents, who are in a position to recommend HECMs for Purchase to older homebuyers. “It’s just been dribs and drabs forever,” he says. “It’s not really catching on.” In Pennsylvania’s rust-belt neighbors, Indiana and Ohio, however, one lender sees HECMs for Purchase as a potential bright spot. “I really think that’s where the future of the business is,” says Tom Hedderich, a senior vice president for Hallmark Home Mortgage LLC in Indianapolis. He heads a team that originates reverse mortgages in Indiana, Kentucky, Missouri and Ohio, as well as Florida. For now, he says, HECMs for Purchase make up about 20 percent of his business. They appeal primarily to borrowers in more urban areas, like Columbus, OH, Fort Wayne, IN and Indianapolis. Overall, HECMs have fallen in the two states. In Ohio, endorsements slid from a peak of 1,799 in 2008 down to 676 in 2018, according to Reverse Market Insight. Indiana hit a high of 1,120 endorsements in 2008 before plunging to 387 in 2018. Hedderich says his team has seen a slight increase in business after Hallmark Home tweaked its distribution system to get more forward lenders in its branch network talking about reverse mortgages. Kentucky, he adds, has traditionally been a less-active market. According to Reverse Market Insight, HECM endorsements peaked at 528 in 2008 before falling to 235 in 2018. Virginia and Maryland have ridden a similar roller coaster. But falling interest rates and rising home values appear to be sending the coaster uphill, according to lenders in the two states. “That’s making a differ- ence,” says PattyWills, sales develop- ment manager with Open Mortgage LLC in Ellicott City, MD. The com- pany is based in Austin, TX. The impact has been most pro- nounced in the latter part of 2019, she says. “We have been able to make more loans work than before.” Lenders also are optimistic about proprietary products, espe- cially in the DC area where home values are among the highest in the U.S. “Our hope is that it just becomes another option, the same way conventional or FHA is” in the forward mortgage market, says Neil Sweren, senior vice president of the reverse mortgage division of Atlantic Coast Mortgage LLC, based in Fairfax, VA, a DC suburb. He is based in Owings Mills, MD. “Why should this be any different?” The challenge lies in securing state-by-state approval for proprietary products, he adds. Virginia and DC have approved them, but as of press time Maryland had not. “You see more affluent, highly educated people with higher property values doing HECMs. Going back 10 or 15 years, you saw people in foreclosure that were in desperate situations.” —Dennis Cronin, American Advisors Group Tom Hedderich Neil Sweren REVERSE MORTGAGE / JANUARY-FEBRUARY 2020 31