REVERSE MORTGAGES SHOW SIGNIFICANT GROWTH IN 2007
FHA releases year end HECM Data
WASHINGTON, D.C. (January 15, 2008) — FHA insured reverse mortgage loans or Home Equity Conversion Mortgages (HECM) increased by 26.5% from 2006 to 2007. The loans, better known as reverse mortgages, have seen unprecedented growth over the last three years as the demand for reverse mortgage products continues to accelerate. The 2007 loan volume marks an important milestone for this growing segment of the mortgage industry.
“2007 saw a continuation of the impressive upward trajectory in the growth curve for reverse mortgages. Uncertain market conditions and declining consumer confidence after the sub-prime implosion slowed growth in the latter part of the year, but nevertheless a new benchmark — surpassing annual production of 100,000 loans — was achieved,” according to Peter Bell, President of National Reverse Mortgage Lenders Association (NRMLA’s).
“In addition to HECM growth, a record number of new proprietary reverse mortgage products were rolled out in ’07 and are beginning to gain market share,” Bell continued.
The FHA HECM endorsement report illustrates growth and sets the stage for continued expansion. Here are highlights from the FHA data*:
- New entrants continued to penetrate the market in 2007 with 786 new active lenders, increasing the total number of active lenders to 1,674.
- 2007 ended with a record setting 108,287 HECM endorsed loans.
- Top 10 Lenders generated 47,005 HECM endorsed loans in 2007, accounting for 43.4% of total volume. Top 3 Lenders include, Wells Fargo NA, Financial Freedom, and Bank of America NA.
Another important trend to emerge from the year end report is the shifting gender demographics of those utilizing this product. According to FHA, of the HECM endorsed loans in 2007, 44.6% were made by single females, 18.2% single males, and 37.2% by dual applicants. In 2000, the demarcation was 56.8%, 13%, and 38.2% respectively. “The changing demographic nature of reverse mortgage users, with borrowers as likely to be single males or couples, rather than single females, reflects a continuing maturation of this market with broader consumer acceptance,” explains Liz Scholz, NRMLA’s chief operating officer. The trend signifies the changing attitude towards this product and its growing use as a financial retirement tool, not to be reserved to a specific segment of the senior population.