Falling Endorsement Rates Point to Third Consecutive Year of Decline

The year to date total of Home Equity Conversion Mortgage (HECM) endorsements has seen some growth but may not be able to combat a decline in both the monthly and annual endorsement rate, indicating a weak second half of the year, says the latest report from Reverse Market Insight.

July garnered 5,511 reverse endorsements, 5.9% less than June, and a 6.6% decrease from July 2010. It marks the first time in four months that endorsement rates declined on a year over year basis, says RMI. The exits of Financial Freedom, Bank of America and Wells Fargo will contribute to a possibly weak last six months, although the origination process will likely cause Wells endorsements to continue through September or October.

Both Wells Fargo and Generation Mortgage trended positively for July endorsement rates, and Generation more than doubled its June total with 490 endorsements. American Advisors Group and One Reverse Mortgage also gained slight increases, while MetLife experienced a significant drop, going from 1,079 endorsements in June to 716 in July. Overall, the industry total for the past year has declined.

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In addition to falling endorsement rates, RMI shows a decline in application numbers compared to last year, pointing to a continued downward trend for the immediate future. RMI says Wells’ absence in July applications will further affect this trend.

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One graph in the newsletter demonstrates a four-month lag-time for endorsements, with RMI’s application-funding-endorsement timeline assumption, which points to a continued decrease in endorsement volume. And, RMI says, the last four months of growth the industry has experienced probably won’t be enough to offset a combined eight months of negative growth, leading to a third consecutive year of decline.

View the report here.

Written by Alyssa Gerace

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  • Other issues that will effect our industry in the near future and lead to year four and five being lower as well.

    If the lending limits are reduced.

    How strict will the of credit/income qualification be in the near future?

    Interest rates begin to go up?

  • Other issues that will effect our industry in the near future and lead to year four and five being lower as well.

    If the lending limits are reduced.

    How strict will the of credit/income qualification be in the near future?

    Interest rates begin to go up?

  • As to overall endorsements we are in for a downhill ride for awhile.  Next fiscal year will be remembered as the year the lender pie was re-divided not the year overall HECM endorsements grew.
     
    The new top forty lenders should do better next year.
     
    The only question left is how will individual originators do, better or worse?

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