Is There A Surprising Reason Why Miami Is A Reverse Mortgage Haven?

It turns out the #1 hotspot for reverse mortgages is Miami, according to information released by the National Reverse Mortgage Lenders Association.

A look at HUD data by Reverse Market Insight, a consulting firm based in Aliso Viejo, CA, indicates that three of the top 10 markets in the country are located in Florida according to NRMLA. The association says that Miami was the top market in the country by a 2 to 1 margin. FHA insured 9,561 HECM loans in the Miami metro area, followed by Los Angeles (4,126), Tampa (3,956), Santa Ana, CA (3,695), Baltimore (3,595), Phoenix (3,582), Orlando (3,556), Richmond, VA (3,493), Philadelphia (3,317) and Chicago (3,184) to round out the top 10.

I find the numbers to be entirely logical — but not because Miami is a retirement haven.

I used to go to Miami with some frequency because global warning had not yet made Washington a reasonable place to stay in the winter. Collins Avenue was then lined with two-story motels and you could easily snag a room for not-too much money.

As it happened, I knew some of the largest developers in the area, gentlemen then in their 70s and 80s who had bought property when most of Florida was groves, ranches and swamp. They had made money elsewhere and brought their checkbooks to Miami, buying tens of thousands of acres at a time.

Now the Miami area is filled with high rise and expensive condos, many built on the allure of sun, sand and the thought that rising prices were like ocean views — endless. And so while there are many areas with large numbers of seniors, Miami has a combination of both a visible senior population and a huge stock of empty condos.

In thinking about the NRMLA numbers you have to wonder why Miami not only leads the pack in terms of reverse mortgage originations but leads by so much.

It’s just a guess, but I suspect that Miami may also lead the nation in another category, the use of reverse mortgages to avoid foreclosure. According to RealtyTrac.com, Florida has the second-highest rate of foreclosure filings in the country — and Dade County is a particular hot spot for overdone deals.

In other words, combine the financial beauty of FHA reverse mortgages — no monthly payments for principal and interest, no lender recourse beyond the value of the property — with the natural beauty of Florida and you have a combination that sure looks better than a lost home.

It would be interesting if the next reverse mortgage survey asks borrowers why they used such financing. My suspicion is that rising unemployment levels, falling home values and declining pension returns are influencing reverse mortgage volume far more than in the past.

This entry was posted on Monday, January 12th, 2009 at 2:44 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.