HECM Endorsements Up 6.8% in February, Optimistic Outlook

HECM endorsements increased 6.8% in February to 6,904, the highest monthly total in a year, and just 1.7% below the rate of endorsements from a year earlier, according to data compiled by Reverse Market Insight. During the month, the number of active lenders continued an upward climb, increasing by 9.9%.

The data also shows improvement for reverse mortgages in some of the hardest-hit housing markets, including Fresno (+22.4%), Sacramento (+8.5%) and Tucson (+14%). Several other severely depressed housing markets, such as Miami (-50.1%) and Phoenix (-14.3%), are still struggling in terms of HECM loans, but RMI considered the improvement in a few stronger areas to be a good sign.



“We’re almost sure to see endorsement growth next month based on application trends recently,” the report said. Applications fell 10.6% in January, but increased 27.4% from a year ago. January has historically been a down month for applications, but the industry still struggles to see volume meet that of previous levels.

“Several clients have mentioned that February application volumes are surprisingly strong, but there is no doubt that January’s numbers took a step in the wrong direction,” the report said. Weather is a reason being cited for the January decline, John Lunde, RMI president told RMD. Bounceback from tough weather in January as well as Bank of America’s exit from the business driving volume to other lenders could be cause for a strong February, he said.

See the full report.

Written by Elizabeth Ecker



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  • Let’s be clear. With no B of A, most lenders may do as well if not better but that does not mean total applications industry wide will be up.

    Imagine that. B of A is gone, there are more lenders, the loans per lender drop but every lender has more applications. This is why the loans per lender has no practical meaning. It is a point for conversation as the final call is going out at the bar.

    What is most interesting is that another originator pointed out to me this morning that last February we had more endorsements than we had applications in October 2009. That was an interesting tidbit that I believe he was sending to John Lunde for posting.

    • I know you’re not a fan of the loans per lender metric, but mathematically it seems that BofA leaving and all else equal would increase the number rather than decrease? Perhaps I’m misunderstanding your statement?

      With respect to February 2010 endorsements vs. October 2009 applications, the general rule of thumb (endorsements trail apps 4 months) doesn’t work very well with unusual circumstances. The app surge in Sep 2009 to get ahead of 10/1/2009 principal limit reductions muddied the waters a lot around that time frame. And of course, endorsements happen before/after 4 month from application all the time, so it’s more a loose guide than a hard and fast rule.

      I enjoy your commentary even when I don’t agree with it, nice to have someone keeping us on our toes!

      • John,

        First I need to correct my comment. I was discussing applications per lender not endorsements per lender. The term “loans per lender” is vague but it is more logical that they are endorsements than applications. That imprecision is mea culpa.

        The withdrawal of B of A from the market should have little impact on endorsements until at least April if not May or June. Where the withdrawal will be felt immediately is in applications but not necessarily the application numbers reported in the monthly FHA Single Family Outlook since those applications are actually FHA Case Numbers. Of course, all of this assumes that originators who have left or will leave B of A will not take their loans with them. If that is not the case….

        The rest of the information in this reply focuses on endorsements. Since we cannot discuss history which has not occurred, let’s project numbers for July 2011. Let’s say the endorsements were only 6,800 of which none relate to Bank of America. Then assume that the number of active lenders is to 771 for that month and includes all of the active lenders in February 2011 plus 31 new ones (I have done no analysis on actual lenders for February). The new active lenders only had one HECM endorsement each. Let’s say all lenders picked up one loan in May from the demise of B of A and that was the source of the 30 endorsements the new active lenders had. Let us assume that Wells volume actually dropped by 97 endorsements in total. Thus the total reduction of 104 endorsements is composed of the Wells reduction of 97 and the B of A reduction of 777 endorsements for a total reduction of 874 minus the increase of all lenders without Wells (which is separately accounted for) of 770. Then assume all other variables in July are the same as they were for February.

        The recasted endorsements per lender as adjusted for February 2011 are 9.33 while for May 2011 it is only 8.82. We have more active lenders in May over February, endorsement volume is lower in May, yet every single active lender but Wells had more endorsements in May. So does the “loans” per lender mean anything as to describing the activity in the market? It is probably the most meaningless stat out there.

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