FHA releases year-end HECM data
Federal Housing Administration (FHA)-insured mortgage loans, or Home Equity Conversion Mortgage (HECM) loans, increased by 26.5 percent 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.
Peter Bell, President of the National Reverse Mortgage Lenders Association (NRMLA), said: "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."
Bell also said, "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."
The FHA HECM endorsement report illustrates growth and sets the stage for continued expansion. Here are highlights from the 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.
•The top 10 lenders generated 47,005 HECM endorsed loans in 2007, accounting for 43.4 percent of the total volume. The top three lenders are Wells Fargo, Financial Freedom and Bank of America.
Another important trend to emerge from the endorsement report is the shifting gender demographics of those utilizing this product. According to FHA, of the HECM-endorsed loans in 2007, 44.6 percent were to single females, 18.2 percent were to single males and 37.2 percent to dual applicants. In 2000, the demarcation was 56.8 percent, 13 percent and 38.2 percent, respectively.
NRMLA Chief Operating Officer Liz Scholz said, "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." The trend signifies the changing attitude toward this product and its growing use as a financial retirement tool, not to be reserved for a specific segment of the senior population.
For more information, visit, www.nrmlaonline.org.