Legacy Reverse Mortgage CEO Jim Cory was interviewed in an article on Yahoo Finance explaining why consumers don’t need to worry about big banks exiting the lending business. In an article authored by Polyana da Costa for Bankrate.com that screamed across Yahoo Finance last week (http://finance.yahoo.com/news/Try-smaller-banks-for-reverse-brn-540175595.html), she begged the question: is the reverse mortgage industry getting more competitive, and does that hurt consumers? To answer that question, da Costa reached out to Legacy Reverse Mortgage CEO Jim Cory for his take. His answer was that yes, the industry is more competitive, but that doesn’t necessarily hurt consumers. Since the three biggest lenders in the reverse mortgage industry abruptly and without warning pulled out of the market as originators this year, competition has become stiffer, Cory explains. But for consumers, that simply means they’ll just have to look a little harder for the right lender. Of these three lenders , the two big-box banks that most recently announced their intentions to divest their interests in the reverse mortgage market are Wells Fargo and Bank of America. Financial Freedom, formerly the largest reverse mortgage lender was the first of these three large lenders to pull out in January. The Financial Freedom circumstance differs quite a bit however, in that they were once a subsidiary of Lehman Brothers and later owned by Indymac Bank, right up through their takeover by the FDIC. A few short weeks after that came the announcement by Bank of America that effective immediately, they would discontinue offering reverse mortgage loans to consumers. Of the roughly 61,000 reverse mortgages outstanding at the time, BOA serviced 5,600, or about 10%. Then in June, Wells Fargo announced they too would quit offering reverse mortgage products. That was particularly surprising, considering the bank had managed to wrestle control of about 25% of the market. The absence of the nation’s largest reverse mortgage lenders doesn’t raise any concerns for Cory. He says there are plenty of lenders who are willing and able to pick up the additional volume they’re likely to experience going forward. And for consumers in the long-run, thriving competition leads to smaller barriers of entry, more choices and perhaps eventually, even lower costs. Other reverse mortgage insider opinions The biggest threat to the availability of reverse mortgages now and into the near future isn’t the exit of major banks out of the lending circle, said Peter Bell, president of the National Reverse Mortgage Lenders Association (NRMLA). The biggest threat is property values. Other industry insiders including Cory and Bell agree that it’s the depreciating value of equity seniors have amassed in their homes. Property values are still down in over 50% since their 2007 highs in many real estate markets, zapping away the equity consumers and lenders rely on to secure the reverse mortgage loan. So the big bank’s collective exit from the industry isn’t much to worry about. Keeping up on property taxes, interest rates staying near zero, and a recovery in the housing market should be borrower’s primary concerns. If you’re interested in learning more about a reverse mortgage or know someone who is, you’ll need to know the basics first. It’s a financial product that allows seniors aged 62 years or older convert the equity they have in their home into a loan. Borrowers can use the cash anyway they want to. Contact us today toll-free for more information at (800) 991-4613.
Please Rate this Article 5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
