We have all read and heard about the results of the the credit crisis, which all begain with high-risk home loans. The entire forward mortgage industry is in a world of hurt.
I have friends in the mortgage industry from Seattle to Phoenix and east into Texas. All of their respective mortgage businesses are down. Some are down as much as 75%.
One common denominator of those crying the blues is that they are all in the forward mortgage segment of mortgage lending. On the contrary, reverse mortgages are booming.
The reasons are really two and a half fold. The first and most important is reverse mortgages by their very nature do not obligate the borrower to make payments. It's why people get reverse mortgages in the first place.
The reverse mortgage company simply needs to lend such that it creates enough cushion between the value of the home and the cash it allows a borrower to pull out. As long as enough cushion exists here its a fairly safe deal for the lender.
Adding to the recipe, the over 62 market is growing like a weed. Many demographers believe the over 62 population will double by the year 2030.
Furthermore, with the ever increasing cost of living and this group's propensity to save less than its parents, the need for additional income will persist.
I haven't looked at the exact numbers of how much the stock market is down, but many seniors are running scared because of it. Many of my new reverse mortgage applications have been predicated on this.
This group must be feeling like they just got punched in the stomach. The safety net, which they've been building over the years, just had a bunch of holed cut out of it. These folks are looking for patches.
There is a ton of uncertainty in the marketplace, and this will remain so for the indefinate future. Home value are taking a beating and we really don't know how bad it will get.
The real nemesis to the reverse mortgage industry is home values reducing radically. Outside of this fairly unlikely occurance it seems the future looks bright. - 15224
I have friends in the mortgage industry from Seattle to Phoenix and east into Texas. All of their respective mortgage businesses are down. Some are down as much as 75%.
One common denominator of those crying the blues is that they are all in the forward mortgage segment of mortgage lending. On the contrary, reverse mortgages are booming.
The reasons are really two and a half fold. The first and most important is reverse mortgages by their very nature do not obligate the borrower to make payments. It's why people get reverse mortgages in the first place.
The reverse mortgage company simply needs to lend such that it creates enough cushion between the value of the home and the cash it allows a borrower to pull out. As long as enough cushion exists here its a fairly safe deal for the lender.
Adding to the recipe, the over 62 market is growing like a weed. Many demographers believe the over 62 population will double by the year 2030.
Furthermore, with the ever increasing cost of living and this group's propensity to save less than its parents, the need for additional income will persist.
I haven't looked at the exact numbers of how much the stock market is down, but many seniors are running scared because of it. Many of my new reverse mortgage applications have been predicated on this.
This group must be feeling like they just got punched in the stomach. The safety net, which they've been building over the years, just had a bunch of holed cut out of it. These folks are looking for patches.
There is a ton of uncertainty in the marketplace, and this will remain so for the indefinate future. Home value are taking a beating and we really don't know how bad it will get.
The real nemesis to the reverse mortgage industry is home values reducing radically. Outside of this fairly unlikely occurance it seems the future looks bright. - 15224
About the Author:
A good dissertation on the reverse mortgage is given in this 11 page Texas Reverse Mortgage Report. For nineteen most frequently asked questions regarding California and reverse mortgage issues, click here.
