HECMs Lose Ground to Proprietary Reverse Products

Why It Matters

The shift signals a growing preference for private reverse‑mortgage solutions, reshaping competition and potentially altering senior‑homeowner financing options. Lenders and regulators must monitor how this trend affects market stability and consumer protection.

Key Takeaways

• HECM endorsements down 1.4% to 2,088 loans in March
• Proprietary reverse mortgages hold 52% of Q1 market share
• Proprietary volume $953 million beats HECM $875 million
• Mutual of Omaha leads endorsements with 497 loans
• Growth only in Great Plains and Mid‑Atlantic regions

Pulse Analysis

The latest Reverse Market Insight data shows a clear inflection point for senior‑homeowner financing. While the Federal Housing Administration‑backed Home Equity Conversion Mortgage (HECM) program has long been the industry standard, endorsements slipped for a second consecutive month, dropping to 2,088 in March and remaining below the 2,320 recorded a year earlier. This slowdown coincides with a surge in proprietary reverse‑mortgage products, which now account for more than half of all originations in the first quarter. The shift reflects lenders’ efforts to diversify offerings beyond the government‑backed model, targeting borrowers who seek greater flexibility or different fee structures.

Financially, the impact is tangible. Proprietary reverse products generated approximately $953 million in loan volume during Q1, surpassing the $875 million produced by HECMs. New View Advisors attributes this growth to the rollout of new lines of credit and lien‑based products by firms such as Finance of America and Longbridge Financial. Regionally, only the Great Plains and Mid‑Atlantic showed year‑to‑date HECM growth, areas where proprietary options remain scarce, suggesting a direct competitive relationship between product availability and loan uptake. Lender rankings also shifted, with Mutual of Omaha Mortgage reclaiming the top spot at 497 endorsements, while Finance of America fell to second place.

For the broader market, the rise of proprietary reverse mortgages raises questions about consumer protection and regulatory oversight. Unlike FHA‑insured HECMs, private products lack a uniform guarantee framework, potentially exposing seniors to higher fees or variable terms. As the share of private offerings expands, policymakers may consider tighter disclosure requirements to ensure borrowers understand the trade‑offs. Meanwhile, lenders that can balance innovative product design with transparent pricing are likely to capture the next wave of senior financing demand, reshaping the reverse‑mortgage landscape for years to come.