Recently interesting thoughts were voiced, as I was ruminating with colleagues about the state of the reverse mortgage industry. The opinions proffered ranged from things are not good to things are great. Now you have to admit that this is a wide disparity. Or is it? Perhaps it just depends upon the focus of the individual.
On the one hand, one could look at the gross number of loans and say wow, the industry has grown significantly in the past few years. Over 91% of all loans ever closed have settled since 2000. Even more astonishing is this statistic: Over 40% of these loans have closed just in the past 19 months. In the early years, the aggregate amount of closed loans grew at a rather anemic pace. During the first 10 years of the program only about 36,000 loans were closed. However, in the next 8.5 years over ten times that amount were actually closed.
One could also look at the increase in the amount of lenders offering the program. It seemed that when I started in this industry over six years ago, there were only a few hundred of us at best. Today, that amount has grown exponentially.
Some say that the more lenders that offer the program the better it is for the industry and for our seniors. Others say that there are just too many of us. I say competition is a great thing. It has the potential to make us better. “Better” is a choice that you make. "Better" could be defined any way that you like. Competition creates a zero-sum game. There are winners and losers. You lose if you give up or refuse to get better or become innovative. Economists tell us that creative destruction must occur in competitive markets.
Others say that this industry is special and different. Accordingly there should be some threshold requirement to enter this field. While there may be something here, it could certainly raise restraint of trade issues. And then it depends upon a balancing act of fairness and protection of our seniors.
Many remember the halcyon days when the type of HECM programs were few and every lender had the same rates and the same programs. The CMT was king. The concept of market differentiation was important to getting loans in the door. The industry has gone through a cataclysm of sorts as the vagaries of Wall Street have played havoc with some of the programs. Just when you think a program is here to stay, it is gone. Nobody said that change is easy. While it is certainly necessary, the reverse mortgage program could not continue to expand it its original nascent state. Investors are expecting much more from an industry and its programs that have now come of “investing age”.
This leads me to the next point. It was suggested that many loan officers hate change of any kind. Well get use to it. Life is change. The HECM and proprietary programs have changed.....and will continue to change. FHA has changed. (Just review the HECM mortgagee letters). NRMLA has changed through the years. The expectations of our elders have changed. They now expect more from their loan officer. And of course there will be many changes to come…….inventive programs, industry wide certifications, increasing state and federal oversight, more stringent codes of conduct, more conservative pricing, and much, much more competition….on every level of the industry.
So what is the state of the industry? I say it could be better. To say that it is good or great belies the fact that every industry could do more. “Better” is the fuel of improvement. It keeps us moving in a positive direction. Our industry has a long way to go before it arrives at its chimeric destination. We can’t rest upon our laurels. We still have many misconceptions to debunk. We still have much educating to do- on many levels. Indeed, “better” is a great thing.
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