With the final tally of reverse mortgage loans in calendar year 2012 showing volume down more than 20% over 2011, the outlook for the coming year still has several major “wild cards” in play.
December Home Equity Conversion Mortgage (HECM) volumes drove a continuing downward trend, recording 3,912 endorsements and dropping 11.8% from November, according to the latest report from Reverse Market Insight (RMI).
These numbers drove the annual volume to come in at 52,992 loans in total, down 22.9% from the previous year total.
While numbers were expected to fall due to lender exits including the earlier departures of Bank of America and Wells Fargo, the additional impact from MetLife and First National Bank of Layton exiting the business proved to drag volume down perhaps more than expected, according to John Lunde, RMI president and co-founder.
“We think transition issues arising from other exits by MetLife and FNB Layton for example account for the rest of the decline in 2012 and ate up any growth the industry might have had,” Lunde says.
As for the low volume having an impact on on future growth, the horizon is looking up, RMI says, pending a few uncertainties in play.
Annual growth is expected based on a housing turnaround that has begun to take hold, but several unknowns could present headwinds for a potential rebound.
The lender exits from 2012 combined with upcoming product changes expected from HUD in 2013 could stand to present a new drag on volume, Lunde says. Beyond the adjustments to the fixed rate standard product outlined by HUD’s Carol Galante in December, additional “wild cards” will come into play.
“The remaining wild cards are T&I set asides and financial assessment, which could potentially have larger negative impacts than either point above,” Lunde says. “These will largely determine the volume level in 2013 and beyond and the range of possibilities is unusually large simply because we don’t know what changes FHA will make.”
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