Reverse Mortgage Volume Lags 11.9% Year-Over-Year

Although Home Equity Conversion Mortgage (HECM) endorsement volume has declined slightly on a monthly basis, so far it’s accounting for a higher share of the Federal Housing Administration’s overall single-family market, compared to fiscal year 2011, although year-over-year volume is lagging.

Reverse mortgage market share volume of the Federal Housing Administration’s overall single-family portfolio dropped to 5.3% from September’s 6.1%, but the program is still accounting for a higher share compared to the last fiscal year’s 4.2%.

HECM endorsement volume declined slightly to 4,653, down 16.8% from September 2011. Compared to the previous fiscal year-over-year data, volume is down 11.9%.

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Chart: HECM Saver Market Share 2011

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HECM Saver Market Share 2011

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The majority of endorsement volume went to standard traditional reverse mortgage transactions, at 4,055, while HECM Saver volume dipped 35.5% to 347. The percentage of the Saver’s share of the overall HECM program dropped for the first time in several months to 7.46%.

The HECM Purchase program also saw fewer endorsements, down 31.4% from September to 129.

View the FHA Single-Family Outlook for October 2011.

Written by Alyssa Gerace

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    • 2545,

      What are you warning about?  Is it reduced fundings in volume or dollar amounts?  Is it reduced endorsement volume?Are you saying lenders will see closing volume reductions, application volume reductions, or both?  Most importantly what are you basing your prediction on? 

      While some of us expect industry totals to drop significantly this fiscal year, I was not aware that anyone was predicting reductions for the vast majority of lenders.  While some are very Pollyannaish on increased individual originator production this fiscal year, that is much muddier to others of us.

      Please expand in more detail on your prediction.

  • At 1:16 AM (EST) this morning, HUD posted the endorsement totals for November 2011.  It was not good news for the industry as a whole even though many lenders have seen a definite increase in their endorsement totals over this same time last fiscal year. Interestingly Wells Fargo had 24 endorsements last month leaving them as the third largest retail originator of HECMs through the second month of this fiscal year, just 33 beind One Reverse.

    The total was a very disappointing 4,654 or exactly one more endorsement than for the month of October 2011.  The conversion rate from assignment to endorsement has eroded still further to 68.2% with the rolling 12 month total which ended yesterday being the worst (70,600 endorsements) for any month since at least October 2006. It is now likely the total for this calendar year will be less than 70,000 endorsements (unless total endorsements for December 2011 exceed 5,953 which is unlikely).

    As will be presented in a later comment, the immediate future is not as bright as we would like it to be even this deep into the fiscal year.

  • It seems somewhat useless to correlate FHA forward information to HECM information except for purposes of understanding how HUD might be able to shift the use of personnel and other limited resources including counseling grants.  The information which is a strong indicator of future HECM endorsements is the “application” information (in actuality, case numbers assigned) HUD/FHA supplies monthly in its Outlook report.
       
    As stated early yesterday afternoon in another comment, case number assignments for the last five months are way down.  The total for the five months of June through October 2011 is 39,051 which is 10,411 short of what the total was for the same five month period last year.  Using the current 12 month rolling conversion rate (68.2%), the endorsements for the first five months will be about 26,632 endorsements.  Using the very skewed five month conversion rate of 64.2% for the five month period ended February 2011, total endorsements for the five month period ended February 2012 are projected to be 25,066.  With an ever shrinking conversion rate, one would expect total endorsements for the five month period ended February 29, 2012 to be between 24,000 and 27,000.
     
    Some predicted that the total for this fiscal year will be less than 36,000 endorsements.  That seems far too pessimistic based on case number assignments over the five month period ended November 30, 2011.

  • It is always darkest before the dawn! It has been a slow process, but as we educate financial planners and other professionals , the light shines as they understand how a RM can be utilized to  extend a seniors investment assets well into their 80’s and 90’s. Unless congress comes up with ideas on how to lower medical costs and improve Medicare and Social Security (not cut them) , the Reverse Mortgage right now is one of the only solutions to help seniors.

    • Mr. Wyrostek,

      There is a tendency in our industry to put the cart before the horse. 

      Just because we can competently present the mechanics of a reverse mortgage does not mean we have the education necessary to enlighten financial planners about the proper use of HECMs in financial planning strategies.  It is financial planners like Dr. Salter, CFP and Mr. Evensky, CFP who are helping us and their own industry understand how HECMs and other reverse mortgages can be used to enhance the strategies employed by CFPs.  Not many in our industry are there just yet.  It is we, the alleged educators, who could use the education at this point in time.  So, yes, there is light but it is light which is coming our way, not vice versa just yet.

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