New Lenders Enter Reverse Mortgage, Optimistic About Growth Prospects


Walter Investment Management Corp. is the latest addition to the growing number of lenders entering the reverse mortgage industry as it acquires Reverse Mortgage Solutions (RMS) Inc.

A Reuters report on September 4 quoted Walter Investment CEO Mark O'Brien reiterating the industry's positive long-term growth prospects. The deal is expected to grow Walter Investment and continue capturing the reverse mortgage industry's greater market share.

According to Walter Investment, RMS has $12 billion in unpaid principal of reverse mortgage loans and has issued about $1.1 billion of reverse mortgage backed securities in the first six months of 2012.

In July, Impac Mortgage announced its plan to expand into the mortgage lending business. Like Walter Investment, Impac was banking on the growth potentials of the industry. Without a current major player, Impac is optimistic that growth is awaiting the company as it expands into reverse mortgage.

Reverse mortgage giants like Bank of America and Wells Fargo left the industry in 2011. Early this year, MetLife rounded off the exodus of key players of the industry.

In spite of the exits, Reverse Market Insight (RMI) reported that the industry registered a rise in loan volume in June to 5,182. Endorsements in the same month also increased by 17% from May. RMI is positive that the industry will display better retention of its reverse mortgage volume despite the exodus of industry giants.

The exit of major players and the criticisms over reverse mortgage products prompted by the release of Consumer Financial Protection Bureau's (CFPB) report in June failed to prevent the entry of new players and the wave of published research upholding the value of reverse mortgage in retirement planning.

In its August issue, the Journal of Financial Planning, once again, published an article heralding Home Equity Conversion Mortgage (HECM) as a risk management tool. By this time, the focus is on HECM Saver.

Aside from Journal of Financial Planning, Smart Money also ran an article in August aimed at reversing the negative views of reverse mortgage. Barry Sacks, pension law and retirement planning practitioner, also published his own take on the CFPB Report via the National Reverse Mortgage Lenders Association (NRMLA) website.

Moreover, applications for reverse mortgage loans are also on the rise. According to the latest Federal Housing Administration outlook report, applications for HECM were up by 4.9% in July to 7,374 from 7,032 applications in June.

The tide in retirement planning is changing, and financial planners and key players expect reverse mortgage to play a vital role in the trend.


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