FHA Lowers All Reverse Mortgage Volume Expectations for 2012

The Federal Housing Administration made revisions to its future Home Equity Conversion Mortgage (HECM) volume projections, including estimates for performance of the HECM Saver over the next five years. Adjusting its revisions down, FHA now takes a more conservative stance on HECM volume in 2012—and beyond.

The Department of Housing and Urban Development announced the new projections based on its annual actuarial study of its Mutual Mortgage Insurance Fund, released Tuesday.

Previously, FHA projected HECM endorsements for 2012 would reach 88,000 units; an increase from 2011 volume, which totaled 74,000. In its annual actuarial review of the Mutual Mortgage Insurance Fund, FHA now estimates that 2012 will see 71,420 FHA-backed reverse mortgage loans, with an uptick not seen until 2013. Volume in 2013 is projected to reach nearly 88,000 loans, with the number continuing to increase through 2018.


Chart: HECM Volume Projections 2011

Tags: HECM Volume Projections 2011

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Written by Elizabeth Ecker

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  • On what basis is HUD predicting over 70,000 endorsements this fiscal year?  

    The number of case numbers issued in June through September coupled with the loss of Wells Fargo, Financial Freedom, and Bank of America during last fiscal year does not support that prediction.  Add to that the dramatic rise in the certified counselee dropout rate, financial assessment underwriting, the higher cost of marketing in a Presidential election year, little chance of significant increases in home values, the remote possibility of a lower lending limit, etc. and you have the perfect storm offsetting the dramatic increase in the senior population over the last four fiscal years.

    As has been said on several occasions, this is the year of the individual lender, not of the industry or individual originators (although some do not agree with the latter).  As expected many lenders are dressing up their marketing campaigns and there are at least three new national spokespersons which were not part of the industry on October 1, 2010 and are not replacements for existing spokespersons:  Pat Boone, Barbara Eden, and Ray Lucia. So on a very positive note, endorsements for most lenders should rise as should their percentage share of the market. Things are somewhat muddier when it comes to TPOs, although fiscal year 2012 could easily be a good year for TPOs as well.  

    It looks like another poor year for the HECM for Purchase product (less than 1,650 TOTAL endorsements) and a year of growth in the Saver up to 7% to 8% of all endorsements from about 5% last fiscal year. Saver endorsement predictions would have been much greater if Wells Fargo were still in the industry.

    Based on all relevant data, it seems endorsement volume for the industry will drop by around 20% to slightly less than 60,000 endorsements this fiscal year, that is as long as home values do not deteriorate more than 2% of their current levels.  Although not currently indicated, total endorsements could also get worse if the LIBOR expected interest rate takes a turn for the worse due to uncertain economic conditions in Europe.  Other than the growth in seniors owning homes, there is literally no significant indicator which points to higher endorsements for the industry as a whole this fiscal year.

  • Keep dreaming FHA and everyone who believes that the volume will be back to 2009 levels by 2015. Much too positive how quickly the housing market and reverse volume will pick up. It’s going to be very slow recovery..one that is not going to recover in 3 yrs. Especially with rates increasing over this time and financial assessment reducing some applicants…keep dreaming.

  • Ones like roxie1 are predicting less than 3,000 endorsements per month this fiscal year.  That is about half of what HUD is predicting.

    It would be helpful if roxie1 told us why HUD and the even more pessimistic James Veale are wrong. 

    Even better would be for those who think HUD is too pessimistic would speak up.

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