HECM Applications Fall 17%, Saver Sees Its First Monthly Decline

Total HECM applications fell 16.6% in April, to 7,371, down from 8,838 applications in the previous month. Year over year, applications saw a 9.8% decline (see chart).

To date, FHA has received 56,490 HECM applications in fiscal year 2011, ending Sept. 30, and projects the total number to reach 80,000 for fiscal year 2011.

Chart: Reverse Mortgage Application Trends

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Reverse Mortgage Application Trends

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HECM endorsements totaled 6,123, including 392 Savers, which saw a 4% slight decrease during the month from 409 in March. The decline represents the first monthly decrease for the new reverse product, which was rolled out in October 2010. At 392 endorsements, HECM Savers represented 6.4% of total HECMs.

Overall, reverse mortgage endorsements were down 16.2% from last month’s total of 7,306. Year over year, HECM endorsements posted an 11.1% gain from 5,511 in April 2010.

In terms of reverse mortgage refinance activity, refis saw a slight decrease from 5.1% of total endorsements in Mach to 3.2% in April.

View the full FHA Outlook for April.

Written by Elizabeth Ecker

 

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  • Looking at the numbers yet further, to get to the assignments issued between June 1, 2009 and May 31, 2010 during the current 12 months will take almost 11,000 applications during May, 2011.
     
    How can HECM endorsements reach 100,000 for the current fiscal year?  Just six months ago, one industry spokesperson proclaimed at the NRMLA Convention that we would have over 100,000 endorsements during this fiscal year.  The total assignments for the last 11 months were less than 98,000.  So with a historical conversion rate of less than 73% where are the endorsements going to come from?
     
    Was the projection made by this NRMLA speaker “disingenuous”?  I doubt it but there would be far less damage done by my declaring that than the tax-exempt organization he heads up declaring the same thing about misinformation provided by a US Representative.  Yet that is exactly what that tax-exempt organization did.  Why?  He is a well recognized spokesperson in the industry; he knows words have meaning.
     
    Why would this leader allow the organization to make such a declaration?  To decry the information as junk, nonsense, or some other description is fine but to declare the speaker as being intentionally deceitful is another.  Although regretable, declaring it as an individual would be OK but from an organization which is attempting to put out the truth about reverse mortgages is entirely different especially if that organization is tax-exempt.  I find the actions of this organization disappointing at best.
     

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