Large Lenders See Reverse Mortgage Market Share Grow to 64% in 2010

While reverse mortgage endorsements were down 35% in 2010, Reverse Market Insight points not to volume declines, but consolidation as the biggest industry trend of 2010 in a report released Thursday.

During the year, the number of active lenders fell by 47.2% and the largest lenders reaped the benefits. According to RMI, the top 10 lenders saw their retail market share grow from 40.5% in January 2010 to 64.7% in December. “Clearly, the higher volume companies did not suffer 2010 in the same fashion as smaller brokers and lenders,” says RMI in its report.

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Source: Reverse Market Insight

Bank of America’s decision to leave the industry earlier this month will likely move the top 10 market share back down without another massive brand and distribution network to replace it.

One question that remains unanswered is where the bank’s retail volume came from. If production came largely from the bank’s retail branches or current customers, it’s likely that volume won’t be coming back in 2011. However, if business was generated by individual retail loan officers, “they are likely to find homes elsewhere and the industry will retain that volume,” says John Lunde, President of RMI.

Since the regulatory environment clearly favors bigger lenders, “the trend of fewer, larger lenders is intact and looks set to continue for the foreseeable future,” says RMI.

View a copy of the report here.

Written by Elizabeth Ecker

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  • While RMI is attempting to put a positive spin on this ratio, the information shows the incredible but growing domination of the industry by the few. Like John L. indicates, the B of A withdrawal will set the trend back some but the question is which entities will be able to take advantage of the B of A share at least until its return into the industry (yes, I expect it to return but probably not for some years)?

    It seems the Top Ten are in the best position to snap up a great deal of that void. Even if B of A volume is all swept up into the non-Top-Ten lenders, without B of A, the Top Ten still had over 49% of the total retail edorsement volume in the industry during December 2010. Who does not believe that some of that volume will go into the hands of the Top Ten?

    No doubt like at Wells some originator volume comes from their own production and some from branch referrals. But few seem to have taken the NMLS exam which limits where they can work.

    With only four months to go to generate FHA Case Number Assignments which would normally turn into endorsements in this fiscal year, if one assumes that their volume will be about 40% of what it was last year, the loss in endorsements will be about 1,300 when compared to the same four month period last year. 1,300 endorsements is more than three of the Top Ten did in total endorsement volume during all of last fiscal year.

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