HECMs Gain FHA Share Despite Lower Yearly Volume

Reverse mortgage endorsements made a yearly gain on the total share of those insured by the Federal Housing Administration, according to the September 2011 Single-Family Outlook, although overall volume levels were down.

Home Equity Conversion Mortgages (HECMs) saw a slight yearly increase in the number of FHA-insured mortgages, to 5.8% of all endorsements, compared to last year’s 4.5%.

Reverse mortgage endorsements in September accounted for 6% of total endorsements, with volume down on both a monthly and yearly basis.

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Endorsements decreased 3.7% from August to September, and were down 7.6% on a fiscal year basis, with 73,129 HECM endorsements in FY 2011.

HECM Savers accounted for 9% of September’s endorsements, and made up 5.2% of the fiscal year’s HECM endorsement total.

The HECM Standard Purchase gained in popularity, with endorsement volume increasing to 188 for the month, 75.7% more than in September of the previous year and 32.4% more than in August. Still, at slightly more than 1,500, HECM Purchase fiscal year volume remained well below FHA’s projection of 2,400.

View the FHA Single-Family Outlook for September 2011.

Written by Alyssa Gerace

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  • Alyssa,

    There are only two types of HECMs, Savers and Standards.  Standards compose over 90% in all time periods.  What you are confusing is Standard Traditional (refis) with Standards as a whole.  Standard Traditionals (refis) composed 84% and 89% of all endorsements. 

    [All categories of HECMs are Standards in the Outlook report EXCEPT for Savers at the bottom.  This is a very important distinction.]

  • Too many in the industry are overly focused on the purchase product.  Last year, the purchase product increased by 125 endorsements despite the increased reaching out to real estate licensees.  After initial introduction on October 4th (not even October 1st) and not all lenders offering the product, Savers had two and one-half times the number of endorsements of the purchase product.  What is also clear is with the short lead in time for Savers, it has taken most of this fiscal year just to get some originators to understand that the product is far more than an alternative to Standards.
     
    Does anyone expect the purchase product to grow by 300 endorsements next year?  It will be surprising if the number of Saver endorsements do not double next year, composing at least 12% of total endorsements.  After six years (three years from now), there is little statistical grounds to believe that the Purchase product will have the number of endorsements Savers did this year alone.
     
    We have seen offers of coaching and training on the purchase product.  People like Michael Banner and others sing the praises of the purchase product but “where is the beef?”  At least it gets more of us in front of real estate licensees.
     
    The purchase product is an intensely regional product with some application in all regions of the country.  As the real estate market normalizes, we should see more and more originations in the states where seniors normally move to like Florida and Arizona; it is unlikely this product will ever do as well in those states where more seniors move out than move in.

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