New Niche: Appraising Reverse Mortgages

New Niche: Reverse Mortgages
by Len Fishman

While the volume of "forward" mortgage appraisals has declined, the volume of reverse mortgage appraisals keeps increasing. In the past three years the number of lenders offering reverse mortgage loans has increased over 150 percent. In fact, in 2000 there were 6,640 FHA reverse mortgages done nationwide- this year the number of FHA reverse mortgage loans has increased to 107,558. That's an amazing 1,619 percent in seven years! To put it mildly, this market is on fire.

As the demographics of America change from "baby boomers" to senior citizens, the demand for reverse mortgages will only continue to increase. Did you know that every day for the next 18-20 years, more than 8,000 people will turn 62 and become eligible for a reverse mortgage? According to Fannie Mae, currently 20 million+ people are older than 65. Of these, 77 percent are homeowners and 84 percent own their home free and clear.

When I realized the trend, I started to move my appraisal business into the reverse mortgage industry. That was in the mid-1990s and I have enjoyed every minute.

The appraising part is pretty much the same as on any mortgage. Most are FHA assignments. FHA's HECM (Home Equity Conversion Mortgage) was the first reverse mortgage program, though new conventional reverse mortgage loans are being developed everyday.

The main difference is the clients- specifically the homeowners. I treat each one the way I would want my parents or grandparents treated. During a one hour inspection, I spend about 10 minutes inspecting the home and the remainder of the time visiting with the customer. I have met some fascinating people from a Medal of Honor recipient to one of the first pilots to fly a China Clipper from San Francisco to Hawaii. Senior citizens are a vocal group. If the customer is happy, your client will be happy. A happy client means more orders.