Federal Housing Administration (FHA) Commissioner Julia Gordon thinks that more U.S. Department of Housing and Urban Development (HUD)-approved housing counselors should be trained to work with Home Equity Conversion Mortgage (HECM) borrowers, according to perspectives she shared this week during an online housing conference hosted by HUD.
The news, first reported by Inside Mortgage Finance, stems from an expectation that HECM borrowers could seek to extract more equity out of their homes now that mortgage rates have come down. In turn, lenders will take notice of the trend and seek to compete for HECM refinance business.
“We are entering into an environment where rates are going down, and what that’s going to mean is that reverse mortgage originators, along with mortgage originators in the forward market, are going to be looking for opportunities to refinance,” Gordon said, according to the report.
The housing counseling community and HUD must “be very, very mindful of efforts to get seniors to refinance their HECMs,” Gordon said. HECM-to-HECM refinances should be considered by borrowers in context of their full range of circumstances. Rates are one factor, but length of occupancy in a home should also be considered, she said.
During the COVID-19 pandemic, the historically low-rate environment led HECM-to-HECM refinance business to become a sizable share of industry volume in 2021 and 2022, reaching nearly half of all endorsements in both years. When rates saw a significant jump, however, the refi boom dissipated.
At the height of the boom, some reverse mortgage professionals reported fielding more inquiries from borrowers who received solicitations for refinances. Industry marketing professionals have aimed to emphasize the importance of judicious use of any marketing materials sent to the reverse mortgage industry’s core senior demographic.
Last year at the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting and Expo in Nashville, David Berenbaum — deputy assistant secretary for the Office of Housing Counseling at HUD — spoke about the importance of adding more HECM counselors nationwide.
“[W]e want to increase our collaboration with NRMLA, and all of you as industry professionals,” he said in 2023. “This is a priority for us. As Americans are aging, we know that, in fact, there will be an increase in the number of reverse mortgages originated, and we’ll see an increase in the reverse mortgage for purchase side of the equation as well. There’s a critical role of housing counseling there.”