Top HECM Lenders Through May 2009

Below is a list of the top HECM lenders through May 2009.  Be sure to check out the commentary and link below which goes into more detail.

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  • Endorsements for the month of May were 8,396, bringing us to 50,261endorsements YTD.  While down sharply from the previous months, overall endorsement volume for the year is still trending 2.1% above last years levels.
  • The endorsement weakness was across the board, as all top 10 lenders and all regions saw significant declines.  We aren’t sure if this is a HUD endorsement backlog issue, a data issue, or if we are really seeing a drop in funding volume across the industry as margins and rates take a toll.
  • Of the top 10 lenders, only two have volume declines vs last year on Year to Date numbers: Financial Freedom and World Alliance Financial.  We wouldn’t shocked to see a new #3 in the industry by year’s end (on a retail funding basis).
  • The strongest HUD region YTD is New York/New Jersey, with unit growth of 23.7% vs last year. Following closely on its heels are the Rocky Mountain (+18.4%), Northwest/Alaska (+17.6%), and Southwest (+17.2%) regions.
  • The Southeast/Caribbean region remains the leader in terms of endorsement volume (11,757 units YTD), but is the 3rd worst performing region in terms of growth at -3.2%.  The dubious distinction of worst growth belongs to the Pacific/Hawaii region (-9.9%).
  • One of the more important metrics we track is the “New Lenders by Month” on page 4.  May saw 75 new lenders receive their first endorsement, which is the lowest number of new lenders entering the business since September 2007.
  • On top of that, the number of lenders receiving an endorsement this month fell by 269, or -21%.

May 2009 MIC Summary Report

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  • The list is a little outdated because it still says “Financial Freedom Senior Funding”. They changed their name to “Financial Freedom Acquisition” a few months back.

    I was made more aware of the name change last week because they’re the only Lender I can use for North Carolina and the homeowner said “absolutely not”. She wasn’t comfortable with the “acquisition” portion of the name and told me to wait until we’re approved with another Lender.

  • “it would be interesting to know how many case numbers were assigned in May. ”

    The critic makes an excellent point – is this information available?

  • Critic is correct in that what we may actually be seeing is the April decline based on originators struggling with the 4/1 valuation guideline changes and the resulting confusion in the marketplace.

    Demand is there, valueation is not. The 4/1 adjustment was draconian.

  • On 4/1, certain appraisal guidelines were changed which had the effect of making nearly every neighborhood in America, a declining market. Appraisers had their workload doubled vis-a-vis the research required to support a decent valuation.

    An unintended consequence was that many appraisers seem to have taken the short path to the lowest valuation, at the expense of our clients, who are not looking to flip or move, but rather to live in the home they love for the rest of their life if they can.

    Nearly everything negative we have experienced recently has demonstrated the effect of the law of unintended consequences.

  • Fannie Mae didn’t help the situation by making the adjustable product irrelevant and eliminating the CMT based HECM. I believe the lower numbers are also related to the processing times on the fixed rate product.

  • Critic

    You have a great point in regards to critical and strategic trend analysis needed by originators in making marketing decisions.

    At http://www.ReverseFortunes.com we have developed our productivity suite which can give the individual L/O the critical data needed to make marketing decisions based on their regional trends, and L/O characteristics.

    It can also be used at corporate, broker,and branch levels to analyze the data over a more scaled structure.

    Example. June and July of 2008, 2007 my P&L was negative. This year I took a close look at my productivity suite and noticed a decline in sales during those months for the last three years in a row. So this year I have adjusted my marketing budget accordingly. We are not only projected to be profitable through June July this year but we are also setting aside extra reserves to kick off our marketing campaigns in mid July.

    Check it out!

  • Going back to Fannie Mae, I still would like to hear Peter Bell’s analysis of what the new head of 1 to 4 unit housing, Karen Pallotta, thinks about reverse mortgages. Is she trying to shove them off on Ginnie Mae by pushing us into LIBOR products? Where does that leave the annual adjusting? Are there any LIBOR based annual adjusting products out there?

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