The first casualty of the upcoming reverse mortgage changes has been revealed. NewDay USA, a top-15 lender, has decided to completely exit the reverse mortgage industry, after HUD’s official announcement of the upcoming reverse mortgage program changes.
According to an article published in Reverse Mortgage Daily, company executives announced on September 7 that they would stop originating new Home Equity Conversion Mortgages immediately. In addition, NewDay would not close anymore outstanding applicants and any outstanding loans will be transferred to another company.
The exit has been attributed to the changes that were implemented on September 30.
It’s shocking to see how quickly companies are pulling out, even before the changes are implemented. I don’t know if it signals another massive exodus, just like the one that happened during of the Recession of 2007-2009 or if it’s just one company who saw no future gains in the reverse mortgage industry.
In a sense, it demonstrates how extensive these changes will be, even though this isn’t the first time this year that changes are made to the reverse mortgage program.
Back in April, with the elimination of the Standard Fixed-Rate, companies were forced to adjust to having one less product in their arsenal, but no one jumped ship.
The upcoming changes though, tell a different story.
They will change the program completely as we know it, possibly making many people scared about how it will all play out. It look like NewDay would rather be safe than sorry, even if the changes, or its consequences, have yet to be determined.