Reverse Mortgage / November-December 2020

Nonetheless, his volume has grown, he says. “We have to work a little harder, but because of the market, business has been really good.”

The volatile market has prompted more people to look at home equity, but they have had trouble accessing home equity lines as banks pulled back. “The reverse mortgage has really been a great answer,” Buck says

The reverse purchase, meanwhile, has been attractive to California transplants, Buck says. One constraint on the market has been the inventory of homes to buy in Idaho. As has been the case nationwide, fewer homes have been hitting the market in Idaho. “That started even last year,” Buck says.

The purchase business also has been good in Arizona, according to Nina Penny, CRMP, who is with Malibu Funding Inc. She is based in Phoenix and licensed in both Arizona and California.

About 80 percent of her business comes from HECMs for Purchase, thanks to relationships she has cultivated with Realtors. “I spend a lot of time upfront educating them and their clients,” Penny says. “It’s a very different approach, but I think it makes a big difference.”

The only cloud has been the difficulty faced by borrowers who want to sell homes in California, lenders say. Real estate activity was halted for a while, but when it resumed, there were numerous public health rules in place for showing homes and closing deals.

Penny has been approaching financial advisers for referrals in expectation that the election could drive business this fall. “A lot of people are very concerned about which kind of president we might have going forward,” she explains. They may want a line of credit as a backup in case the market reacts poorly to whoever is elected.

Indeed, while lenders have been pitching the reverse mortgage as a strategic retirement planning tool, many borrowers still see it as a product designed for a crisis, says Tim Nelson, CRMP, reverse mortgage department manager for V.I.P. Mortgage Inc. in Scottsdale, AZ.

As a result of the pandemic, his company has been seeing growth over the last year as borrowers cast around for alternatives. Some senior borrowers, for example, have lost part-time jobs that they counted on to supplement their incomes, Nelson says. “Now, all of a sudden, that mortgage payment is a lot more difficult.”

“It’s a time in our country when people are really considering the importance and value of a reverse mortgage.” — Laura Kiel, Kiel Mortgage

A reverse mortgage can help borrowers dispense with mortgage payments, and that has been the motive this year for a growing share of borrowers in California and Nevada, says Rick Sweeney, CRMP, senior branch manager for Open Mortgage LLC in Incline Village, NV, which is near Reno and the border with California.

Typically, about a third of his reverse mortgage borrowers are looking to extinguish an existing mortgage, Sweeney says. Since July, it has been about two-thirds. Sweeney attributes the swing to people’s uncertainty about the economy.

The same uncertainty is affecting people’s usage of the reverse proceeds, Sweeney says. In the past, borrowers had specific plans to travel or make big purchases, such as a new car. Now, the needs are more theoretical, he says. “That same person this year is saying, ‘I want to have some money for when this thing is over.’”

Other interest is coming from children seeking the means to afford in-home care for their parents, Sweeney adds. The children may have been considering assisted living or nursing homes but have changed course due to the pandemic’s toll on people in senior-living facilities.

And given the apparent staying power of the pandemic, the appeal of the HECM is likely to grow, according to Laura Kiel, CRMP, a reverse mortgage loan originator with Mortgage Master Service Corp., which does business as Kiel Mortgage. The company is based in Kent, WA, near Seattle.

“It’s a time in our country when people are really considering the importance and value of a reverse mortgage,” Kiel says.