Reverse Endorsements Down 15.3% in May as Industry Loses B of A Volume

The reverse mortgage industry continued its slump into May, as retail and wholesale endorsement volume dropped 15.3% compared with the previous month, a report from Reverse Market Insight noted this week.

And although many were hopeful that the industry would absorb Bank of America’s volume after its exit from the market, RMI data shows a decline in reverse applications. Initially, applications went up 8.5% in March, after BofA stopped taking them in February. After that, applications dropped 9.5% in April, and 8.3% in May.



Source: Reverse Market Insight, July 2011

RMI points to a chart that shows HECM applications per business day in March and April. Since BofA formerly held about 10-11% of the retail endorsement volume, the chart’s data can make a case that more than half of BofA’s volume has been lost since the bank’s exit, RMI writes.

June application numbers may get a boost, says RMI, since Wells Fargo loan officers were allowed to accept them through that month. Endorsement numbers won’t reflect Wells’ exit until the fourth quarter, however, but either way, RMI expects an overall decline in HECM endorsements, especially now that Financial Freedom, BofA, and Wells Fargo, which collectively represented 30-35% of total endorsement numbers in the industry, are all officially finished accepting applications.

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Written by Alyssa Gerace

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  • roxie1,
    Wow!!  I am a cynic but you, you are a genuine pessimist.  I am sorry but my cynicism blinds me to such pessimism.
    I disagree with your analysis.  John Lunde has placed the drop at 50% of the volume produced by these industry giants.  You are much more aggressive taking it from a 21.5% loss to the entire market to 67% or more.
    There is a base of seniors who are needs based with sufficient equity.  Yes, there will be a drop because of the very thing you describe.  While Wells provided an image of stability and strength in the early days of the industry they did little to provide real growth in terms of sheer numbers.  Senior Lending Network on the other hand saw the key ingredient, increasing home values, and combined with their marketing acumen placed reverse mortgages on the map.  Wells’ image helped but not that much.
    John is right without major banks, we will have a hole which will not be filled.  We need more marketing campaigns to offset further erosion.  It seems both Urban and Security One will be stepping up and providing part of that.  But more, much more is needed.
    I know sales managers will use our comments as the kind of gloom and doom originators should avoid but if there is always a Pollyanna view of production, those promises will eventually seem like what they are, empty and unrealizable goals.  Yes we need to reach higher but setting a goal that is one-third greater than can be achieved is nonsense.  Very soon one loses the image of a strong leader with hard but achievable goals to an image of being nothing more than an unyielding task master with no understanding of the market.
    Best of luck in your new endeavor.

  • Facts are helpful in predicting the future. Up through 2007, Financial Freedom, using James Garner, owned the reverse mortgage business, far exceeding even Wells Fargo, but mostly from the wholesale side. Both companies had large retail sales forces and they, the foot soldiers, created the demand. Robert Wagner helped a lot, as well, though I think his time has passed.
    Financial Freedom is long gone and BofA and WFB owned about 43% of closings when they left. But they haven’t gone very far away.
    Especially in a  low equity environment, it is easier to help seniors through forward mortgage products and these banks will do that very well indeed.
    As I have said before, they not only took their huge share of the RM market with them, they will now come after the rest of it.
    Next year, closings of 2-3000 per month will begin to be the norm. Watch for it.

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