Confirming what originators have said for months, reverse mortgage inquiries were down in Q1 as compared with last year due to last October’s Home Equity Conversion Mortgage program’s rules changes, according to Best Rate Referrals Q1 2018 Mortgage Consumer Profile Report.
Best Rate Referrals, a consumer marketing finance firm that matches leads with lenders, sourced their data from consumers who were seeking to be matched with a lender, comparing information from January to December 2017 with January to March 2018. Only consumers with a credit score of “fair” or higher were included in the study.
Reverse mortgage decreases were seen after the HECM rules changes took effect.
“The changes made last fall are starting to show waning effects on the sustainability of the reverse mortgage product,” the report states.
According to the report, the average current home value of a potential HECM borrower decreased in most markets, signaling a shift for owners of higher valued homes away from the reverse mortgage product.
“New England had the largest decrease. Home market value increases were seen during Q1 2018 for the Mountain, South Atlantic and West South Central regions,” the report reads.
The report also highlighted a need for education about the reverse mortgage loan product, as there was an increase in Q1 2018 of inquiries from unqualified borrowers, like renters. The report noted that many reverse mortgage lenders left the market “due to restrictions placed on them with the program changes”.
“When lenders left the reverse market, they stripped related content from their website,” the report reads, attributing the education gap to the decrease in available information.
In March, originators said they did not notice many changes in the ages of borrowers inquiring about a loan, but Malcolm Tennant president of Access Reverse Mortgage Corporation, told RMD that he did note a higher proportion of need-driven inquiries versus financial planning-type inquiries.
Written By Maggie Callahan
