The Reverse of the Credit Crisis - Reverse Mortgages
We have all read and heard about the results of the the credit crisis, which all begain with high-risk home loans. The entire forward mortgage industry is in a world of hurt.
I know mortgage loan officers all over the country. Each one tells a similar story. All their businesses have nose dived, and some have lost as much as three quarters of their business.
And they all seem to have one thing in common. They are all in the forward mortgage market. The reverse mortgage end is doing quite swimmingly.
The question is why? First, since banks on the forward end are so hesitant to lend out money one can see how a reverse mortgage, which does not require monthly interest or principal payments, might be a healthier investment for a bank or the banks investors.
The reverse mortgage company simply needs to lend such that it creates enough cushion between the value of the home and the cash it allows a borrower to pull out. As long as enough cushion exists here its a fairly safe deal for the lender.
Adding to the recipe, the over 62 market is growing like a weed. Many demographers believe the over 62 population will double by the year 2030.
Furthermore, with the ever increasing cost of living and this group's propensity to save less than its parents, the need for additional income will persist.
Another less important factor is the current economy. Many seniors have lost much of their savings in the stock market dive of '08, and large numbers are looking for additional financial tools.
You can imagine how this group feels. The proverbial rug has been pulled out from under them, and they are groping for some financial tool to create some feeling of safety.
Where things go, economically, in the coming years in anyone's guess. Home values are falling with no real end to the recession in sight.
Reverse mortgage lenders could see real issues if home values drop drastically from here, but barring that event the sun appears to be shining on this business.
I know mortgage loan officers all over the country. Each one tells a similar story. All their businesses have nose dived, and some have lost as much as three quarters of their business.
And they all seem to have one thing in common. They are all in the forward mortgage market. The reverse mortgage end is doing quite swimmingly.
The question is why? First, since banks on the forward end are so hesitant to lend out money one can see how a reverse mortgage, which does not require monthly interest or principal payments, might be a healthier investment for a bank or the banks investors.
The reverse mortgage company simply needs to lend such that it creates enough cushion between the value of the home and the cash it allows a borrower to pull out. As long as enough cushion exists here its a fairly safe deal for the lender.
Adding to the recipe, the over 62 market is growing like a weed. Many demographers believe the over 62 population will double by the year 2030.
Furthermore, with the ever increasing cost of living and this group's propensity to save less than its parents, the need for additional income will persist.
Another less important factor is the current economy. Many seniors have lost much of their savings in the stock market dive of '08, and large numbers are looking for additional financial tools.
You can imagine how this group feels. The proverbial rug has been pulled out from under them, and they are groping for some financial tool to create some feeling of safety.
Where things go, economically, in the coming years in anyone's guess. Home values are falling with no real end to the recession in sight.
Reverse mortgage lenders could see real issues if home values drop drastically from here, but barring that event the sun appears to be shining on this business.
About the Author:
To get a great guide discussing the California reverse mortgage go to this site. For a great Q&A site for the reverse mortgage in California questions, you click here.
posted by Debt Consolidation Loan at
10:19 PM
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