Is Private Insurance For Reverse Mortgages on the Horizon?
The Mortgage Bankers NewsLink published an interview with Marc Helm, CEO of Reverse Mortgage Solutions where he discusses the current state of the reverse mortgage industry.
At the end of the interview, Helm talks about different efforts that are underway to develop a private market for reverse mortgage products. Specifically, Helm says that one company has approached a major insurer about writing private mortgage insurance on reverse mortgages and the insurance company is interested.
The privately insured product would have a lower LTV than the current HECM program, but for borrowers with higher home values, it can offer a great alternative. Below is an excerpt from the interview.
MBA NEWSLINK: The reverse mortgage concept developed slowly but now seems to be taking off. What will accelerate or impede future growth?
MARC HELM: The greatest accelerant is the current economy. Many of the people who thought they were all set for retirement and would be able to stay in their homes and pay all their bills–while drawing on Social Security and other retirement funds–now are saying, “I’ve got problems.” They never thought they would have to tap the equity in their homes just to get by, but they are going to have to with reverse mortgages.
Also, now you have baby boomers who have lived their whole lives on credit beginning to reach Social Security eligibility and they will be more comfortable with a reverse mortgage to help maintain the lifestyle they’ve become accustomed to. The market has been expanding as a result of increased FHA lending limits, now ranging from $417,000 to $629,000. Many people who didn’t have an interest in a reverse mortgage, because their first mortgage balance was so high, are becoming interested now that they can get more equity out of their homes.
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