Reverse Applications Up 10% in February, HECM Saver Continues to Surge

Reverse mortgage applications increased to 8,149 units during February, up 10.2% from the previous month according to data from the Federal Housing Administration.

While application volumes may not be as high as some would like, it’s up 22.7% from the same period last year.

During February, the seasonally adjusted annual rate for total applications rose 15.6% to an estimated 1,676,800. The actual count of applications was 114,215—9.8% over January which was seriously affected by very bad weather, said the agency. Of the total number of applications, 67,990 were purchase transactions; 38,076 were refinances; and 8,149 were for reverse mortgages.

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In February, lenders endorsed 6,904 HECM units with a total max claim amount of $6.904 billion, up 6.8% from January. Of all the endorsements, 6,092 were traditional reverse mortgages, and 117 were for the HECM for purchase. HECM Saver volume continued to increase, reaching 296 units during the month, an increase of 79.4%.

Overall, FHA endorsed 88,269 mortgages with a maximum claim amount of $16.8 billion in February. This included 46,899 purchase money mortgages and 34,466 refinanced transactions.

For the purchase loans, three out of every four mortgages were for first-time home buyers, according to FHA.

With respect to the refinanced mortgage transactions, 16,459 were prior FHA cases and 18,009 were conventional mortgages converting to FHA.

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  • For 6,904 endorsements to be over $6.9 billion in MCA during February means the average MCA would have had to have been $1 million. I believe that is a misprint.

    Per the Outlook report, on 31,758 endorsements for the fiscal year, the total HECM MCA reflected in endorsements for the last five months is $8.1 billion or average MCA per HECM of about $255,000. The actual MCA for HECMs during the month is about $1.8 billion or an average HECM MCA of about $261,000.

    None of this information comes close to confirming the declarations that we would would see 100,000 endorsements for the fiscal year as late as November 2010. FHA Case Number Assignments (“applications” in the language of the FHA Single Family Outlook report) are still lower on a rolling 9 month basis over last. It is good that an increase occurred in the number of assignments this month but the unanswered question is if the pull through rate is greater or less than it was for the last fiscal year.

    Personally I look at those who make wild claims in the face of rational predictions as losing credibility no matter how pure their motives. There are three more months of FHA Case Number assignments results before the assignment season for this fiscal year ends. Based on assignment numbers to date and last fiscal year’s pull through rate, projected endorsements are running about 3,300 behind last fiscal year. Actual endorsements fiscal year to date are about 7,700 behind endorsements for the same 5 month period last year; however, assignments in the last four months are about 6,100 higher than the same four month period during the last fiscal year, which based on last fiscal year’s pull through rate means about 4,400 more endorsements.

    In seven months we will know if those who proclaimed that we would see more than 100,000 endorsements in this fiscal year are closer to actual endorsement numbers or HUD which projected 75,000 back in early October. At this point of the fiscal year, I would not bet against HUD.

  • For 6,904 endorsements to be over $6.9 billion in MCA during February means the average MCA would have had to have been $1 million. I believe that is a misprint.

    Per the Outlook report, on 31,758 endorsements for the fiscal year, the total HECM MCA reflected in endorsements for the last five months is $8.1 billion or average MCA per HECM of about $255,000. The actual MCA for HECMs during the month is about $1.8 billion or an average HECM MCA of about $261,000.

    None of this information comes close to confirming the declarations that we would would see 100,000 endorsements for the fiscal year as late as November 2010. FHA Case Number Assignments (“applications” in the language of the FHA Single Family Outlook report) are still lower on a rolling 9 month basis over last. It is good that an increase occurred in the number of assignments this month but the unanswered question is if the pull through rate is greater or less than it was for the last fiscal year.

    Personally I look at those who make wild claims in the face of rational predictions as losing credibility no matter how pure their motives. There are three more months of FHA Case Number assignments results before the assignment season for this fiscal year ends. Based on assignment numbers to date and last fiscal year’s pull through rate, projected endorsements are running about 3,300 behind last fiscal year. Actual endorsements fiscal year to date are about 7,700 behind endorsements for the same 5 month period last year; however, assignments in the last four months are about 6,100 higher than the same four month period during the last fiscal year, which based on last fiscal year’s pull through rate means about 4,400 more endorsements.

    In seven months we will know if those who proclaimed that we would see more than 100,000 endorsements in this fiscal year are closer to actual endorsement numbers or HUD which projected 75,000 back in early October. At this point of the fiscal year, I would not bet against HUD.

  • “For the purchase loans, three out of every four mortgages were for first-time home buyers, according to FHA.” I find this statistic very interestin, yet it runs true to my own personal experience with reverse for purchase.

  • “For the purchase loans, three out of every four mortgages were for first-time home buyers, according to FHA.” I find this statistic very interestin, yet it runs true to my own personal experience with reverse for purchase.

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