Reverse Loan Production Has Fallen 'Considerably'

Reverse mortgage production fell to below 6,000 loans per month as of March 31, according to figures released in Philadelphia at the National Reverse Mortgage Lenders Association's 2010 Road Show conference. The industry is coming off its best year ever in fiscal 2009, when originations topped 114,600, according to the Department of Housing and Urban Development's figures. But production started tailing off in November, reported Erica Jessup, a housing program policy specialist in HUD's Office of Single-Family Program Development, and has fallen 'considerably' since then. In March, the Federal Housing Administration endorsed policies for only 5,800 for government-insured reverse loans, she told the meeting. Officials at the conference offered several reasons for the drop in production. Some said the Oct. 1 HUD deadline that changed the formulas for how much of their equity seniors could tap with reverse mortgages caused many borrowers to move up their decisions, essentially robbing lenders of production in fiscal 2010. Others said that with lower home values, borrowers don't have as much equity as they believed, so they are postponing their decisions. And still others said the business is being haunted by negative publicity that is not justified. NRMLA President Peter Bell called them the "three misses: misunderstanding, mischaracterization and misperception." According to HUD's Jessup, California is the top state in terms of traditional HECMs so far this year, with 5,377 loans, followed by Florida (4,214) and Texas (3,405). At the midway point in the government's fiscal year, California also leads in refinancings (1,020) followed by Maryland (381) and New York (350).