Federal
Reserve
Chair
Jerome
Powell

indicated
last
week
that
a
cut
in
the
federal
funds
rate
at
the
September
meeting
of
the


Federal
Open
Market
Committee
(FOMC)
is
on
the
table,
which
would
have
the
effect
of
driving
mortgage
rates
lower.

Most
observers
and
professionals
agree
that
a
rate
cut
would
provide
immediate
benefits
to
the
reverse
mortgage
industry,
particularly
for
Home
Equity
Conversion
Mortgages
(HECMs).
But
the
business
is
also
headed
into
the
potential
for
lower
rates
coming
off
of
a
major
refinance
boom
from
the
pandemic-era
low-rate
environment,
where
HECM-to-HECM
refinances
exploded,
reaching

nearly
half
of
industry
volume
in
2021
and
2022.

To
get
a
better
picture
of
the
dynamics
the
industry
might
be
keeping
in
mind
as
the
FOMC
meeting
approaches,

HousingWire’s
Reverse
Mortgage
Daily
(RMD)
spoke
with


Reverse
Market
Insight
(RMI)
President
John
Lunde.

Editor’s
note:

This
interview
has
been
condensed
for
clarity
and
concision.

Chris
Clow/RMD:
Back
when
it
looked
like
rates
were
going
to
start
spiking
a
couple
of
years
ago,

you
were
vocal
in
advocating
for
the
industry
to
reorient
toward
new
customers.

Considering
where
rates
could
go
and
the
ease
with
which
so
many
reverse
lenders
jumped
in
with
both
feet
on
the
refi
opportunities
at
that
time,
how
are
you
feeling
about
the
prospects
of
another
refi
boom,
considering
all
the
work
over
the
past
couple
of
years
to
reorient
toward
new
borrowers?

John
Lunde:
I
don’t
think
there’s
any
boom
in
the
offing
for
a
really
simple
reason:
we’ve
only
had
high
rates
for
the
last
two
years,
and
they’ve
only
been
higher
than
where
they
currently
are
for
about
a
year
and
a
half.
So,
how
many
loans
have
we
originated
in
that
time?
Not
that
many,
because
the
rates
have
been
so
high.
A
boom
needs
fuel
to
keep
going,
and
there
just
aren’t
enough
loans
to
create
an
actual
boom.

On
the
reverse
side
and
the
forward
side,
you
have
a
similar
dynamic.
All
the
loans
that
were
around
two
years
ago
—
the
ones
that
wanted
to
refinance
—
probably
already
did.
So
you’re
really
only
talking
about
the
loans
in
the
last
two
years,
and
all
that
volume
has
been
pretty
depressed.
I
think
you
have
an
echo,
but
again,
on
the
reverse
side
specifically,
I
don’t
see
a
boom
because
there
just
aren’t
enough
loans.

Clow:
So
without
that
possibility
of
a
refi
boom,
conceivably,
what
immediate
impact
do
you
expect
a
rate
reduction
could
have?

Lunde:
I
still
think
it’ll
be
a
really
good
thing
for
rates
dropping,
simply
because
it’ll
attract
new
customers.
It
makes
it
a
much
easier
prospect
to
show
value
to
new
customers.
All
that
work
reorienting
towards
new
customers
isn’t
lost.
I
think
it’s
exactly
where
we
should
keep
our
focus.
Treat
any
refi
that
happens
as
the
“cream
on
the
top.”

Lastly,
I
think
the
other
thing
to
expect
is
that
some
of
the
forward
guys
are
going
to
be
more
distracted
than
they
have
been
because
the
forward
side
is
going
to
be
more
viable.
And
of
course,
if
that’s
more
viable,
then
that’s
easier
for
them,
because
that’s
what
they
know.
That’s
the
business
that
a
lot
of
them
see
themselves
as
being
in.

Clow:
Could
that
negatively
impact
this
work
we’ve
seen
from

more
forward
lenders
that
have
been
more
active
in
reverse
in
recent
months?

Lunde:
That’s
the
gray
lining
to
the
cloud:
we’re
going
to
have
less
attention
span,
I
think,
from
the
forward
lenders
and
the
real
estate
agents
that
we
need
for
real
growth.
The
last
year
and
a
half,
two
years,
has
been
easy
to
get
the
attention
of
forward
lenders,
agents
and
everybody
else
in
the
housing
and
mortgage
industry,
because
it’s
been
crickets
in
the
typical
business
they
were
doing
three
or
four
years
ago.

So
we
lose
some
of
that,
but
obviously
we
benefit
from
the
rates.
Hopefully,
the
work
that’s
been
done
over
the
last
two
years
creates
more
new
customers
and
more
volume
through
that
method
and
channel.

Clow:
Considering
all
of
the
consolidation
and
how
the
industry
reacted
to
a
major
lender’s
collapse
and
some
of
the
others
that
got
out
of
the
game,
do
you
think
the
business
overall
is
more
right-sized
to
handle
the
additional
business,
or
is
there
potentially
business
left
on
the
table
because
there
aren’t
as
many
players
active
in
the
space?

Lunde:
I
think
about
who
the
right
additional
distribution
partners
are,
and
it
really
is
the
existing
big
forward
lenders.
I
think
as
the
volume
changes,
each
of
the
surviving
reverse
lenders
does
better.
We
could
do
the
same
number
of
loans
we
did
three
years
ago,
and
everybody
would
be
in
a
much
better
place
because
their
share
of
that
same
pie
has
maybe
grown.

But
I
think
the
reality
is
we’re
still
not
really
in
an
overly
competitive
situation.
We’re
much
more
in
a
product
adoption
curve,
as
opposed
to
a
competitive
bloodbath,
where
it’s
a
zero-sum
game
and
all
these
loans
are
going
to
happen.

So
maybe
this
is
circling
back
to
what
you
were
actually
asking:
are
we,
as
an
industry,
not
going
to
do
some
loans
because
we
don’t
have
as
many
companies
involved?
I
think
that’s
always
been
our
challenge.
The
whole
history
of
the
industry,
we’re
not
doing
hundreds
of
thousands
or
millions
of
loans
a
year
because
we’re
not
getting
in
front
of
90-plus
percent
of
the
people
who
should
be
looking
at
this
option.

I
don’t
think
that’s
as
much
of
a
danger
from
the
consolidation
question
as
it
is
just
figuring
out
ways
to
get
those
other
companies
involved.
Every
mortgage
lender
should
have
this
product.
Then
the
question
becomes,
‘is
it
an
internal
product?
Are
they
brokering
it
out?
How
do
they
do
that?’
That’s
a
different
question.
But
I
think
we’re
still
trying
to
achieve
the
first
question,
which
is
the
industry’s
belief
that
every
mortgage
lender
should
have
this
product
and
offer
it
in
a
way
that
works,
given
the
uniqueness
of
the
customer
and
the
product.

Clow:
What
do
you
think
originators
in
particular
should
most
keep
in
mind
as
the
dynamics
could
change?
There’s
a
little
bit
of
a
disconnect
between
the
data
and
policy
side
and
what
people
are
feeling
when
it
comes
to
the
economy.
There’s
also
a
bunch
of
additional
noise
on
economic
policy
due
to
the
election
season.
How
should
reverse
mortgage
professionals
try
and
just
stay
focused
on
what’s
in
front
of
them?

Lunde:
It’s
the
same
as
when
rates
were
going
up.
Keep
in
mind
that
we
don’t
control
interest
rates,
and
nobody
else
we
know
does
either.
Even
the
Fed
has
limited
impact;
it’s
more
of
an
indirect
impact
on
the
rates
that
matter
most
to
us.
So,
you
can’t
really
focus
on
the
stuff
that’s
out
of
your
control;
otherwise,
it
just
drives
you
crazy.

Just
keep
going.
Focus
on
the
business
activities
you
can
control
that
help
you
be
more
successful,
no
matter
what
those
other
macro
factors
do.
I
get
that
it’s
disappointing
and
not
as
effective,
but
take
the
tailwind
for
what
it
is
and
push
forward.
Focus
on
what
you
can
deal
with
and
control.

Clow:
RMI
regularly
covers
the
moves
in
reverse
mortgage
industry
performance
metrics.
Do
you
think
that
a
rate
cut
at
this
stage
of
the
year
could
make
a
difference
in
the
trajectory
of
what
all
of
2024
will
look
like,
or
is
it
too
late
for
that
to
happen?

Lunde:
Again,
the
rate
cut
matters.
I
guess
the
way
I
think
about
these
things
is
that
it’s
all
about
expectations.
So,
what
happens
with
the
rates
that
matter
to
us,
like
the
10-year
rate,
is
really
just
about
whether
the
market
gets
what
it
expected
or
if
it
gets
disappointed.
It’s
about
how
the
market
interprets
all
that.

But
let’s
say
the
10-year
drops
25
basis
points.
If
the
Fed
moves
things
down
25
basis
points
and
the
10-year
drops
by
the
same,
what
does
that
do
for
us?
It
moves
us
down
two
notches
on
the
PLF
curves.
I
certainly
think
that’s
helpful.

But
yeah,
to
the
extent
that
a
rate
drop
in
mid-September
affects
the
10-year
rate—
how
long
does
that
take
to
filter
through
in
terms
of
endorsements
on
the
HECM
side
through
the
end
of
the
calendar
year?
You’re
really
only
impacting
endorsements
for
maybe
a
month
or
two,
just
because
of
the
timelines
involved.

So,
at
this
point,
it’s
much
more
about
setting
ourselves
up
for
next
year
from
an
endorsements
perspective,
which
is
the
number
we
publish
and
the
most
visible
metric
that
everyone
can
easily
see
and
track.
It’s
less
about
how
we’re
going
to
end
this
year
and
more
about
what
we’re
expecting
for
next
year.

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