Reverse Mortgage Volume Riding High Pre-Financial Assessment Fallout

Home Equity Conversion Mortgage (HECM) endorsement volumes in August continued to ride high on the pre-Financial Assessment rush from borrowers, which pushed industry volume to its highest level seen in more than two years, according to the latest data tracked by Reverse Market Insight (RMI).

The boost in endorsements, propelled by the number of borrowers applying for HECM case numbers ahead of the Financial Assessment April 27 deadline, translated into a 14.3% monthly increase in August to 5,750 loans—the highest level since the 5,756 loans reported in July 2013.

“We’ve been talking for the past 3 months now about borrowers with case numbers ahead of the Financial Assessment deadline bumping up the endorsement numbers and this is the highest level yet,” writes RMI in its analysis of the HECM Lenders August 2015 report.

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RMI, however, estimates that the industry will have to wait at least one more month until the Financial Assessment begins to bring down HECM endorsement volumes.

In terms of where the endorsement growth was happening geographically in August, only three of the top-10 regions saw increases in their endorsement levels during the month, with the Pacific/Hawaii leading the way rising 93% to 2,090 loans. 

A similar growth rate occurred in the Northwest/Alaska, which grew 91.7% during the month to 395 loans. Meanwhile, the Great Plains region saw endorsement volumes climb 16.7%.

Seeing the biggest monthly decline, the Mid-Atlantic saw endorsement volume drop 24% in August to 457 loans after logging 601 in July.

As for the top-10 reverse mortgage lenders, the August growth story was felt by most, especially Liberty Home Equity Solutions, which posted a 54.1% increase for its highest volume since March 2014. The 570 loans from Liberty in August brings the company’s trailing 12-month endorsement total to 4,184 loans, taking the number four spot among the top-10 lenders. 

The company trails RMS/Security One in the top-10 rankings, whose 474 loans in August brought signaled a 21.9% monthly increase—also the company’s fourth monthly increase—bringing its 12-month trailing tally to 4,860 loans.

August’s numbers now bring the 12-month trailing industry total to 57,144 loans.

View the RMI data.

Written by Jason Oliva