Reverse Mortgage Lenders End First Quarter of 2011 on High Note

The reverse mortgage industry ended the first quarter of 2011 on a high note, growing for the first time on a year over year basis since July 2009 according to data from Reverse Market Insight.

During March, lenders endorsed 7,306 HECM units, up 5.8% from the previous month and an increase of 25.5% from 2010.

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“It takes more than one month to change the tone of our industry, but we’ve been on the long road back for almost a year now since the May 2010 low point for endorsements,” said John Lunde, President of RMI.  “And while the majority of industry declines were clearly related to principal limit cuts in October 2010, it’s worth noting that other factors started the decline before that as housing markets and interest rates took their toll.”

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The growth was spread around the country with 8 of the 10 regions tracked seeing an increase in volume said RMI.

Active lenders took a dive during the month, losing 68 lenders, down 9.3% from the previous month.

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View a copy of the report here.

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  • It is not as clear that the PLF reductions (which became effective 10/4/2010) reflected in the interest rates above the new floor (and for some ages for all expected interest rates) is as big of the cause of continued low endorsement numbers as it is continued low home appreciation rates. No doubt both contribute to the problem.

    BUT it is good to see higher endorsement numbers for March 2011 over March 2010. Since we are half way through this fiscal year with less than two months to go for more FHA Case Number assignments, it seems HUD was correct in predicting only 75,000 endorsements for the current year. Their projection was clearly more accurate than even my own over enthusiastic projection of over 95,000 at the beginning of this fiscal year.

    Although there are potentially negative issues still facing the industry (credit or capacity underwrites and a lower lending limit), one would hope the next fiscal year will be brighter.

  • Whoops, good catch. I actually meant to reference the October 2009 principal limit cuts rather than 2010, which would make the trend statement much clearer given that we started seeing year over year endorsement volume declines in July 2009 – well before the Oct 2009 cuts would affect.

    • John,

      Much agreed. Thanks for the clarification.

      I like reading and appreciate your insights even though we do not always see eye-to-eye. I was disappointed that your report did not come out on the first or the fourth this month.

      You do a great job. Keep up the good work.

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