HECM for Purchase has been grounded. Reverse mortgage pros are trying to give it wings

Home Equity Conversion Mortgages (HECMs) have long been the gold standard product set for reverse mortgage originators, but they became a minority share of the market earlier this year as proprietary loan volume exceeded HECM volume in the first quarter of 2026.

While private-label reverse mortgages offer advantages like lower upfront costs and larger loan amounts, the shrinking market share for HECMs can also be chalked up to the fact that one of its flagship offerings, the HECM for Purchase program, remains underutilized. HECM for Purchase allows a senior homeowner to tap into their existing equity, sell their current property and buy a new one without taking on monthly payments.

Data from the U.S. Department of Housing and Urban Development (HUD) for fiscal year 2025 shows that purchase transactions accounted for roughly 5% of all HECM endorsements. That share has never crossed into double digits since the purchase program was created in 2009.

At last week’s Western Regional Meeting of the National Reverse Mortgage Lenders Association (NRMLA), a panel discussion focused on ways to jumpstart HECM for Purchase through educational efforts with consumers, real estate agents and forward lending professionals. The five people on the panel shared their experiences with successfully selling and integrating HECM for Purchase into their businesses.

Given that older Americans are the majority of today’s buyers and sellers, why do you think that HECM for Purchase remains such an underutilized tool for the industry?

Christine Jensen, senior vice president of reverse mortgage lending, Fairway Home Mortgage: It’s largely misunderstood. Too many seniors are stuck in a home that no longer meets their needs, but they don’t take action to move into a home that would be more suitable for them, because they don’t realize that there’s an option out there that doesn’t require a mandatory mortgage payment.

When you’re in retirement, the mindset that these people have is thinking that the only option available to them, if they were going to make a move, is that they would have to harvest enough proceeds from the sale of their current home to pay cash for the replacement home. If only they knew they could get into a more suitable replacement home and not have a mandatory mortgage payment, I think we would have higher adoption.

Priscilla Rael-Albin, broker associate, REMAX: I’m the sandwich generation: I’m worried about my kids and I’m worried about my parents. You sort of need to start there as HECMs need to be looked at as a tool for planning for the future.

We have a lot of seniors who are in large homes and need to go to a smaller home. They can’t do the normal loan qualifications because they’re on a fixed income, so they don’t fit into that bubble of purchasing a property with normal financing. A reverse mortgage for purchase is ideal. They can also take some of that cash and invest it to grow their financial wealth. So it’s just big-picture thinking and looking at as a planning tool versus a situation where they think they’re going to lose their house.

There are misconceptions among consumers, but what are the misconceptions among industry professionals about these products, given that you’re trying to educate forward-centric loan officers and real estate agents who may not have much exposure to them?

Patrick Ortiz, regional vice president for the Reverse One division, CrossCountry Mortgage: When I talk to forward loan officers, I break down the basics and demystify what it is. It’s not some exotic program. It’s an FHA-backed loan or a regulated proprietary loan.

I don’t really like to use the term PLF (principal limit factor), because they don’t know what that is. I talk about LTV (loan-to-value) and DTI (debt-to-income) ratios. The more we educate our forward loan officers on what we can do, the less complicated they think it is. Every LO should be able to have a five- to seven-minute conversation with a borrower about the basics of reverse. The way we’re going to springboard the whole program is to leverage our forward lending colleagues.

Sarah Rowan, vice president of mortgage lending, Rate: I think a lot of originators are afraid to say “reverse,” thinking it’s a dirty little word. Their agents might think, “Oh, we’re going to try to keep them in their home.” But when we say “reverse,” it’s about reversing their current mortgage. They don’t realize it expands the purchasing power of the borrower.

They might have a cash buyer, where they sell one home and have cash to buy another. But is that doing right by the senior? They don’t realize that I’m able to get the client into a much better home by rightsizing, rather than just taking the cash and being really strapped on what they’re able to do.

That piece of education is missing. That’s where a lot of lenders get in their own head about pitching products. You’re not losing the deal by talking to them about reverse. You’re opening up additional options that they didn’t know they have.

Can you share an example where HECM for Purchase changed the equation and allowed a client to buy something new? What was the human impact of the deal on the client’s retirement?

Dan Mudd, producing regional manager for reverse, Rate: My favorite HECM for Purchase story involves a client I worked with about 10 years ago. Their mom and dad were getting older, so the kids reached out to me again at the end of last year and asked, “What are the options to help them do a lateral move?”

We were able to work with a local [real estate agent] and sell their two-story, split-level property. We took their equity and put them into a one-story condominium, allowing them to age in place with no money out of their pocket. They were within five minutes of their grandkids, instead of being an hour away. That, to me, was the best situation, because the kids already believed in the product and understood it, and they knew it was the best option for their parents.

Rael-Albin: I had a widow who’d lost her husband. They were both on Social Security, and unfortunately, when you lose a loved one on Social Security, you get the higher of the two payments, but your expenses don’t cut in half. She owned her home free and clear, but her expenses outpaced her Social Security, so she was really struggling.

We sold her home and got her into a single-story, one-bedroom condo. She was able to put, I think, $60,000 or $80,000 into a savings account for a rainy day. She was able to put food in her pantry, she didn’t have a mortgage payment, and all she had to worry about was taxes and HOA fees, which were $700 a month.

You really need to look at it by advising them on how they can have a better life and not be stressed out. They shouldn’t be stressed at 80 years old on whether or not they can eat that month.

Let’s talk about how to structure a successful and durable referral partnership between real estate agents and loan officers. What communication protocols would you use to ensure a smooth process for these types of transactions?

Ortiz: What I tell people is, this isn’t for every one of your buyers. It’s not for every client that’s going to walk through the door at an open house. But it is for some of them. And if you don’t know the program, you’re not offering it and you’re not even having a conversation about it, I promise you, clients are going to have a conversation about it with somebody else.

You need to play to this enormous, over-62 demographic that has all the housing wealth and is actually buying homes right now. If you’re not collaborating and capitalizing, you’re missing the boat. You’re playing with five sticks in your golf bag, but you could play with all of them. I promise you, the game is more fun.

Jensen: I want to talk about new construction and homebuilders for a moment, and the partnerships that we really need to have with that segment of the industry. Too often, seniors are avoiding new-home subdivision sales offices because they don’t think there’s any way they can afford these beautiful, lower-maintenance, easier-living homes.

I had the privilege of working with some clients not too long ago who were selling their quad-level home in Arvada, Colorado, and moving to a 55-plus community in Broomfield. Based on what they were going to net from the sale of the house in Arvada, they were really going to have to limit what they could purchase in the new-home community.

Fortunately, they heard about HECM for Purchase. We got together and I showed them how friends don’t let friends pay cash for their house. We showed them they could actually afford some of those beautiful features that they longed to have. One of the options that the builder offered was this indoor-outdoor fireplace that would serve both the living room and back deck, and that was one of those features that they dreamed of having.

By overcoming industry misconceptions and fostering collaboration among real estate and lending professionals, originators can unlock the true potential of the HECM for Purchase program. Ultimately, this educational approach not only diversifies originators’ business but empowers seniors to right-size their living situations without the burden of a monthly mortgage payment.