March-April 2021

Unlocking New Opportunities for Dream Retirement Your Trusted Partner in Reverse Mortgage Lending Let’s build a stronger business for your clients by unlocking new opportunities for their dream retirement. There are several options to partner with Mutual of Omaha Mortgage. Based on your lending commitment, we design our partnerships to meet your needs. Learn More MutualReverse.com/Wholesale Mutual of Omaha Mortgage, Inc., NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License 4131356. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. For licensing information, go to: www.nmlsconsumeraccess.org #608096599 Low Rates Boost Traditional HECM The appeal of the HECM, however, remains rela- tively strong, given the current low-rate environment. Throughout the pandemic, reverse lenders around the country have reported above-average volume. The low rates, which allow borrowers to take out more money, show few signs of changing. As the economy bounces back from the pandemic, the Federal Reserve expects its benchmark rate to remain at 0.1 percent through 2022. “The challenge for proprietary products in 2021 is really how great the HECM is at the moment,” says Chris Mayer, CEO of Longbridge Financial, based in Mahwah, NJ. Another factor is the increase in the maximum HECM loan limit. It rose from $765,600 last year to $822,375 this year. Mayer estimates that the new HECM limit covers around 90 percent of all homes. That leaves a niche market made up of more expensive homes, as well as condos that are not FHA-approved and thus ineligible for HECMs. But there are other potential markets, Mayer and other executives say. They include homeowners who are sensitive to the higher upfront costs of a HECM and those who carry too much debt to qualify. Another possibility includes homeowners who would benefit from a streamlined way to access smaller amounts of home equity without the payments that come with a traditional home equity line of credit. “The challenge is getting the economics to work,” says Mayer, noting that small-dollar amounts are difficult for lenders in any capacity. Still, he expects reverse lenders to keep experimenting. “In this country, it’s always good to bet on innovation in financial markets,” Mayer says. In addition to product design, breakthroughs also could come in the area of sales and marketing, he says, as lenders find new ways to build acceptance for reverse mortgages of all stripes. “If you can find a market that you think you can sell to, I think you can build a product that will meet that market,” he says. Proprietary reverse mortgages may have hit a speed bump in 2020, Mayer adds. But the product proved durable. “The proprietary market survived and grew through what was a once-in-a-decade financial crisis when COVID- 19 first hit in March and April,” Mayer says. “That was a huge success for us as an industry.” “The proprietary market survived and grew through what was a once-in-a- decade financial crisis when COVID-19 first hit in March and April. That was a huge success for us as an industry.” — Chris Mayer, CEO, Longbridge Financial Chris Mayer REVERSE MORTGAGE / MARCH-APR I L 2021 31