Genworth, Security One Post Double-Digit January Gains

Two reverse mortgage lenders saw their best months ever for production in January, with other top reverse mortgage lenders taking the opportunity to ramp up volume during the month.

Security One Lending and Genworth Financial Home Equity Access both saw more than 25% growth over the course of January, marking their best months in history, according to the latest data report from Reverse Market Insight. The industry overall saw an 11.6% increase to 5,175 endorsements—the highest number since September.

Two other lenders saw double digit growth as well on the retail side: American Advisors Group posted a 23.4% increase and Generation Mortgage picked up a 17.2% gain.

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“If your New Years resolution was to produce more loans in 2012, then you had lots of company along for the ride,” RMI wrote in its monthly retail report. The downside, however, was that October through December saw notable declines, RMI wrote.

The January Top-5 for includes MetLife at No. 1, followed by One Reverse Mortgage, Genworth, Urban and Generation. AAG, Security One, First National Bank, Cherry Creek and Reverse Mortgage USA round out the Top-10 for the month. The trailing 12-month endorsement picture still includes Wells Fargo and Bank of America, however, so it will take time before a true, new, Top-10 will emerge.

“We still have some time before these fall out of top 10 list on our reports,” says John Lunde, RMI co-founder and president.

Regionally, RMI reports that several regions saw substantial growth. Salt Lake City grew more than 50% year-over-year while the Caribbean region, including Puerto Rico, saw a 26.9% volume increase.

But no trend does one month make.

“Given the weakness we’ve seen in applications, I don’t see January as an indication of a new trend of higher volume,” Lunde says. “We’d have to see a turn higher in applications over a couple months to expect anything similar from endorsements.”

View the RMI January HECM Lenders report.

Written by Elizabeth Ecker

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  • Mr. Lunde is right in part.  But it not only takes higher applications but also a change in the trend of estimated conversion rates.  Both go together hand-in-hand.  

    (For purposes of this comment the term “estimated conversion rate” is the percentage ratio of a trailing 12 month total of endorsements divided by a trailing 12 month total of applications which received case numbers during the month, utilizing the four month rule of thumb for the average time required for an application with a cash number just assigned to become endorsed.)

    Until this month we had not seen a single break in the slide on estimated conversion rates since last March.  The overall downward trend started last February with a slight uptick in March.  As Ms. Ecker so rightly says: “But no trend does one month make.”

    As has been stated again and again, the downward trend can only be attributed to the addition of FIT to counseling.  The use of FIT started in full in mid September 2010 with the results clearly seen in endorsement numbers beginning February 2011 and beyond.  CFPs and other financial professionals would have a heyday tearing FIT apart for its utter ineptitude to provide reasonable financial risk assessment to seniors; however, whenever that assessment is made of FIT the comeback is that it is used as a starting point, but to what?

    It has been years since we have seen a trailing 12 month total of endorsements as low as we saw this month. It is over 4,000 less than at the lowest point at any time in many years.  The most current downward trend in this total began last June and has shown no sign of relenting.  Based solely on what Mr. Lunde calls applications, the three month inventory is down 4,000 over the same three month period last year.

    Last year at this time we had over 24,840 endorsements for the fiscal year.  That was one-third of that fiscal year and the endorsement total exceeded one-third of the total endorsements for that fiscal year.  Right now there are less than 19,120 endorsements for this fiscal year.  That makes my estimate of less than 60,000 endorsements (and specifically 58,500) for the fiscal year ending September 30, 2012 seem a little optimistic.  Time will tell.

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