Reverse Mortgage Originations Falter

by Peter G. Miller
June 11th, 2008

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IndyMac Bank, the parent of Financial Freedom, a major reverse mortgage lender, reports that reverse mortgage originations reached $315 million in May. That’s down 10% from April.

A company chart shows that Financial Freedom for the month of May originated loans worth $222.81 million and jumbo reverse mortgages valued at $92.64 million, a total of $315.45 million. That’s down 29.5 percent from a year ago. In May 2007 Financial Freedom originated loans worth $447.66 million.

Interestingly, HUD reported that for the period from May 16-31 it originated 3,963 HECMs — home equity conversion mortgages in HUD-speak.

In the first half of the month HUD originated 5,149 reverse mortgages — meaning that production fell 23 percent in the second half of the month.

Since October 1st, the start of the fiscal year, HUD has approved 91,264 HECM, a strong total.

However, the May figures raise a question: Is the steam going out of reverse mortgage demand? If so, why?

It may be that seniors are waiting for higher reverse mortgage loan limits. With bigger loan amounts such financing would be very much more interesting to a larger number of homeowners.

Or, seniors could be waiting for FHA modernization, Democratic legislation which if passed would lower and cap origination fees.

Stay tuned — let’s see what happens in June.

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This entry was posted on Wednesday, June 11th, 2008 at 6:25 pm 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.

2 Responses to “Reverse Mortgage Originations Falter”

Raymond Denton Says:
June 17th, 2008 at 6:51 pm
Approximately 15% of the homeowners I talk to are waiting for the FHA-modernization bill to pass. Their homes are generally in the 500 to 600 hundred thousand dollar range but FHA’s lending limit is too low for the county they live in. They don’t need the Reverse Mortgage urgently, so they’re waiting for the bill to pass. I’ve told those homeowners I’ll contact them as soon as I hear the Bill will be signed by the President, and we’ll start their loan process at that time.
Joy Mobley Says:
June 18th, 2008 at 3:29 pm
When is this bill projected to be signed by the President?