Key facts
- HECM for Purchase allows seniors to sell their current home and buy a new one without monthly mortgage payments.
- In fiscal year 2025, purchase transactions represented only about 5% of all HECM endorsements.
- Industry professionals are focusing on educating consumers, real estate agents, and forward lending professionals about the program.
- Misconceptions about the program's complexity and its benefits are hindering adoption.
- Successful case studies show HECM for Purchase enabling seniors to age in place, be closer to family, and improve financial stability.
Home Equity Conversion Mortgages (HECMs), once the dominant product in the reverse mortgage market, have seen their share decline, with proprietary loans surpassing them in the first quarter of 2026. A key factor contributing to this shift is the underutilization of the HECM for Purchase program, which allows seniors to leverage equity to sell their current home and buy a new one without mandatory monthly payments.
Data from the U.S. Department of Housing and Urban Development (HUD) for fiscal year 2025 indicates that purchase transactions constituted only about 5% of all HECM endorsements since the program's inception in 2009, never reaching double digits. This lack of adoption was a central theme at the National Reverse Mortgage Lenders Association's (NRMLA) Western Regional Meeting, where a panel of industry experts discussed strategies to revitalize the program.
Panelists identified widespread misunderstanding as a primary barrier. Christine Jensen, senior vice president at Fairway Home Mortgage, noted that many seniors are unaware of options that eliminate mandatory mortgage payments, leading them to believe they must use sale proceeds to buy their next home outright. Priscilla Rael-Albin, a broker associate at REMAX, emphasized that HECMs should be viewed as a forward-planning tool, enabling seniors on fixed incomes to downsize, invest remaining capital, and avoid the stress of potential financial hardship.
Addressing misconceptions among industry professionals is also crucial. Patrick Ortiz, regional vice president at CrossCountry Mortgage, advocates for simplifying the program's explanation to forward loan officers, using familiar terms like LTV and DTI instead of technical jargon. Sarah Rowan, vice president at Rate, pointed out that some originators shy away from the term 'reverse mortgage,' fearing it implies keeping seniors in their homes, when in reality, it can expand purchasing power and facilitate rightsizing.
Personal anecdotes highlighted the transformative impact of HECM for Purchase. Dan Mudd shared a decade-old success story of helping a couple move into a single-story condo, enabling them to age in place near their grandchildren without out-of-pocket expenses. Rael-Albin recounted assisting a widow who, after her husband's passing, struggled with expenses on her fixed income. By selling her home and using HECM for Purchase, she secured a smaller condo, retained significant cash reserves, and eliminated mortgage payment stress.
Experts stressed the importance of collaboration between real estate agents and loan officers. Ortiz urged professionals to engage with the substantial over-62 demographic that holds significant housing wealth, warning that failing to discuss HECM for Purchase means losing potential clients to competitors. Jensen highlighted the need for partnerships with new homebuilders to integrate the program into their offerings, as seniors often avoid new construction due to perceived limitations.