Reverse Mortgage Applications Rise 4% in March

The number of reverse mortgage applications rose by 4%, or 280 loans in March to 7,075 in total, after rising slightly in February, according to data released by the Department of Housing and Urban development Monday.

March applications year-over-year however, are down nearly 20%.

While reverse mortgage applications have experienced a slow increase in the first months of 2012, endorsements have fallen sharply, and are expected to fall further on a monthly basis in 2012, according to industry estimates.

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Chart: Reverse Mortgage Application Trends

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Reverse Mortgage Application Trends

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March marks the mid-way point through current fiscal year 2012. At the halfway mark, the mid-fiscal year HECM application count totals 40,587, HUD reported. There were 95,691 HECM applications in fiscal year 2011, amounting to 73,129 endorsements.

View FHA’s March housing outlook.

Written by Elizabeth Ecker

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  • The raw data above is absolutely correct.  But WHAT is the story?

    Right now the case numbers assigned (applications) in the twelve months ended 3/31/2012 is now 80,085.  Using the current rate for the last 12 months, this application rate translates into about 60,000 endorsements per year.

    However, the endorsement trend is going down.  Based on trends, the expectation for total endorsements for the current year is headed from over 58,500 to 55,000.  If the conversion rate continues to drop and without MetLife, there is some indication that the endorsements for this fiscal year could be slightly over 54,000 which is less than 50% of the total endorsements for fiscal year 2009.  As in the prior three calendar years, the results for calendar year 2012 is expected to be lower still at about 50,500.

    Any talk about 100,000 endorsements for next fiscal year may be comforting speculation for some but hardly a projection based on rational assumptions.  Right now there is some marginal trends which might mean higher endorsements but nothing close to 100,000.  It is too early to tell if endorsements will be up or down for the fiscal year ending September 30, 2013.

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