Counselors See Rising HECM Interest Through COVID-19 Crisis – Reverse Mortgage Daily
- June 25, 2020
- By: Greenpath Financial Wellness
Excerpt from Reverse Daily Mortgage monitors interest in Home Equity Conversion Mortgages.
As the COVID-19 coronavirus pandemic continues, it’s noteworthy to monitor the interest in Home Equity Conversion Mortgage (HECM) options.
Reverse mortgage counseling sessions have increased as more seniors seek out ways to soften the financial shock endured by the country during the crisis. Yet the reasons that seniors ultimately seek a reverse mortgage are not uniformly consistent.
This is according to perspectives compiled from counselors at major agencies, including GreenPath Financial Wellness, which conduct reverse mortgage sessions for borrowers.
Interestingly, while Home Equity Conversion Mortgage (HECM) counseling sessions have risen during the pandemic period, counseling professionals from Farmington Hills, Mich.-based GreenPath Financial Wellness revealed that proprietary reverse mortgage counseling sessions have actually recently gone down, reversing a constantly upward trend observed in 2019.
HECM sessions rise, but perhaps for different reasons
A change noted is that as reverse mortgage counseling sessions have risen, at least in regards to those dedicated to HECMs particularly in the early days of the coronavirus national emergency in the U.S., they may not be specifically because of the pandemic even if the timelines align. This is according to Kathy Conley, stakeholder engagement specialist at GreenPath.
“In March and April of 2020, GreenPath conducted an increased number of reverse mortgage counseling sessions,” Conley tells RMD. “We cannot definitively say this increase was a result of the COVID-19 pandemic as other factors may have also contributed. One such factor is the change in LIBOR, which could result in reverse mortgage borrowers having access to a higher level of proceeds from a reverse mortgage and lower interest rates, which typically increase the number of homeowners refinancing their existing reverse mortgage.”
Still, it may be too early to determine definitive trends, Conley says.
It is a time of people feeling the uncertainty in their finances. It is a time when people want to get to their equity as fast as possible. The urgency has calmed down a bit as the pandemic continues on and we now see that getting a mortgage during a pandemic is not as challenging as we may have thought.
Proprietary reverse mortgage counseling sessions fall
“Two of the proprietary reverse mortgages temporarily suspended originations for their products due to COVID-19 in March,” Conley explains, referring to the offerings from Liberty Reverse Mortgage and Reverse Mortgage Funding.
“In April and May, GreenPath saw a slight decrease in proprietary reverse mortgage counseling sessions for that reason, as well as a slight increase in the number of HECM sessions.”