After changes to the Home Equity Conversion Mortgage (HECM) program were handed down by the Department of Housing and Urban Development (HUD) and the Federal Housing Administration in October 2017, the American reverse mortgage industry has had something of an uphill battle to climb in trying to recover a large amount of lost volume
Some businesses are looking to the promise of an increasing suite of proprietary products to fill in the gaps created by changes like principal limit factor reductions and the possibility of the requirement of a second property appraisal via a new collateral risk assessment, but there are also a lot of originators on the proverbial “front lines” continuing to try and find new business whenever a new lead presents itself.
One place that these struggles are not shared, though, is America’s neighbor to the north, Canada. In fact, it’s not just that the Canadian reverse mortgage industry is doing better right now than America’s, but it’s actually thriving considerably. A new report at Better Dwelling suggests that Canadian reverse mortgage debt is on the rise, as filings in the country’s Office of the Superintendent of Financial Institutions (OSFI) show the balance of reverse mortgage debt jumped in April to a new all-time high in the country, and continues to post above 20 percent growth.
For comparison’s sake, the American reverse mortgage market plummeted in 2018 to a 14-year low, with volume down 27 percent year-over-year according to data from Reverse Market Insight. The American market is also much larger, however, with a total Home Equity Conversion Mortgage (HECM) maximum claim amount (MCA) of $14.1 billion in 2018, compared with roughly $780 million CAD in total year business in Canada.
Still, the health of the Canadian reverse mortgage market stands out, and getting to the bottom of what’s working for it doesn’t require much looking around. There remains only one dominant, primary reverse mortgage lender in the entirety of the country: Toronto-based HomeEquity Bank (HEB)
Author: Cristian Peralta
Date: 7/25/19
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