Without question, the biggest challenge is the ongoing fallout from the 10/2 HECM changes. The combination of lower proceeds to borrowers, which in many cases defeats utilization, and the drastic revenue cuts to originators has crippled the industry. In addition to the new rules reducing or eliminating the net benefit to borrowers, the reduction/elimination of the floor rate and variable margin pricing structure has significantly compromised the origination process. Consequently, reduced origination volume has intensified competition among originators to "get the loan." On the surface, this might appear to be a good thing for consumers, but the reality is the reduced origination revenues coupled with reduced volume are driving originators out of the business. Not a good thing for consumers, originators, lenders or the industry.
Susan A. Pomfret
Cross Country Mortgage
The biggest challenge today, which I believe has been a problem within our industry for too long, is overcoming misconceptions. When you utter the words "reverse mortgage," people automatically put up that barrier and they’ve heard enough. And because of this, consumers and advisors are not eagerly looking at what a viable financial tool this product can be... Our goal is to educate, educate, educate and we have been successful in doing this. By continuing to spread the word, we will help overcome this challenge.
Reverse Mortgages SIDAC
I find the biggest challenge right now is receiving calls from homeowners who are interested in a reverse mortgage, but when talking with them about their situation, learning their estimated home value and that they have a mortgage payoff, there aren’t enough funds. With the lower principal limit Factors implemented last October, it’s more common. When I first got into the industry in 1999, even with higher interest rates, borrowers received significantly more funds. It’s challenging to have to say, “You don’t qualify,” to those who really want one and have a positive attitude toward reverse mortgages.
The biggest challenge is the negativity many carry over from the major changes made by the government in October 2017. As I recruit originators for my team, I can hear discouragement in their voices. I acknowledge the changes have had an impact, but while many see challenges, I see opportunity. We still have a great product. There are still 10,000 clients turning 65 each day. I work for a bank that is stable and committed to the space. This allows me to originate loans across the country and have access to all the lenders and the new proprietary products. As in years past, there is a learning curve to the new regulations and a leveling off in production. I see the future as bright.
The biggest challenge I face right now is consistent, predictable, profitable, scalable lead generation post 10/2. Reducing interest rate margins, to offset reduced principal limits more than to fend off competitors, means lower profitability per loan. Previously viable marketing strategies, which leveraged capital, no longer make economic sense. That leaves us pursuing a more referral partner-centric strategy. While a more relational, education-based marketing approach is not bad from a consumer point of view, it is slower and harder to scale, because it requires originators with a broader skill set and more patience.
The biggest challenge I see right now is being able to satisfy the needs of needs-based borrowers because of the lowered PLFs. I see anywhere from five to 15 new prospect files a day, and often the people who would need to bring some cash into close just don’t have it. Also, people who have come back after looking into a reverse a year or more ago are very disappointed at the lower amount they can borrow. While at C2 our focus emphasizes the retirement planning-based client, it is heartbreaking to not be able to help seniors who need access to their home equity the most, the way we once could.