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36 WHY REVERSE MORTGAGES KEEP MOVING FORWARD For many older homeowners, reverse mortgages are an easy way to tap into their home's equity. Despite many misconceptions about this loan product, they may not be as risky as many believe, according to experts, as more and more homeowners take advantage of the product. An article in Bloomberg explores the recent movement to reverse mortgages. Despite the risk, such as taxes, insurance, maintenance, and utilities as well as a risk of foreclosure, reverse mortgages are still a viable equity alternative to selling and moving. Tightening rules after 2008, including requiring homeowners to show they can afford tax and insurance payments, has reduced the risks involved with reverse mortgages. However, some still note the risks involved. DS News had reported earlier that, according to LendingTree and data from the Federal Housing Authority's Home Equity Conversion Mortgage (HECM) program, HECMs originated at an average rate of 7.1 loans per 1,000 homeowners over the age of 60 between 2012 and 2017. e top city, Virginia Beach, boasted a rate of 13.8 loans per 1,000 homeowners over the age of 60. Government-back loans as a whole have seen a resurgence. Kroll Bond Ratings Agency reported a 63 percent increase in residential mortgage-backed securities (RMBS) issued in 2018 over 2017. e report indicated that if the U.S. GDP was to grow at the steady pace it has this year, until July 2019, the year could see "another robust issuance year in 2019." However, factors such as higher interest rates, home price moderation, and widening spreads that have been experienced by the market in the last few weeks are likely headwinds that might pull down the performance of RMBS next year, the report revealed. "Given the potential downside risks, we aren't forecasting issuance growth in 2019, but believe issuance will be comparable to 2018 levels," KBRA stated in the outlook. DELINQUENCIES RISING IN THESE 3 CITIES Online loan applications are rising with 38 percent of all unsecured personal loan balances being driven by fintech loans, according to the latest TransUnion Q 4 2018 Industry Insights Report. Despite this overall rise in lending led by fintech, the report revealed that the mortgage market continued to soften as delinquencies declined nationally. e serious delinquency rate for Q 4 2018 was 1.66 percent down from 1.86 percent during the same time last year. Additionally, 15 of the 20 largest metropolitan statistical areas (MSAs) experienced double-digit year-over-year percentage declines. "Only three MSAs, Houston, Miami, and Tampa, experienced an uptick in year-over-year delinquencies. is was expected, as the comparison point is Q 4 2017, a quarter when those MSAs experienced an artificially low delinquency rate due to natural disaster forbearance programs," said Joe Mellman, SVP and mortgage business leader at TransUnion. Per the Q 4 2018 IIR Mortgage Loan Summary, serious mortgage delinquency rates have continued to remain low. e serious delinquency rate for Q 4 2018 was 1.66 percent, down from 1.86 percent at the same time last year. In addition, 15 of the 20 largest MSAs experienced double-digit year-over- year percentage declines. Despite the rise in overall consumer borrowing and the increased use of fintech, home mortgages have cooled slightly, the report noted. Data revealed that of the top 20 MSAs, those with an average new account balance of over $300,000 saw a decline of 10 percent in year-over-year originations. On the other hand, those with an average new account balance of less than $300,000 saw growth of 2 percent in year-over-year originations. Average new mortgage account balances dropped to $227,376, from $228,563 in Q 4 2017. "e decrease we're seeing in new account balances could be due to a number of factors, the largest of which may be a change in the mix of mortgage originations from high priced MSAs to low priced MSAs," Mellman said. "Of the top 20 MSAs, those with an average new account balance of over $270,000 had a decline of 17 percent in year-over-year originations, while those with an average new account balance of less than $270,000 saw only a 5 percent decline in year-over-year originations." ough mortgage originations continue to remain low relative to past years, the report indicated a slight increase in lending activity to subprime borrowers. An increase of 2 percent was recorded in originations to subprime borrowers on a year-over-year basis—a growth trend now observed since Q1 2018. e average debt per borrower was $206,922. However, Mellman pointed out that as the mortgage market tightens, "lenders are expressing only slight interest in subprime lending—originations to subprime consumers still represent less than 4 percent of total originations."

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