How Will MetLife’s Departure Impact Reverse Mortgage Volume?

The total number of reverse mortgages in 2012 will be down, MetLife or no MetLife, according to industry estimates. Just how much MetLife will leave its mark on the industry’s loan volume? Not a whole lot, says Reverse Market Insight’s John Lunde, president and co-founder.

Previously projecting annual endorsements of near 60,000, RMI has revised its estimate down following the departure of MetLife from the business to between 56,000 and 57,000.

“Accounting for all the information we have today, with MetLife not exiting, we end up in the 59- to 60-thousand range,” Lunde said in a report. “The worst case scenario of what’s already in the pipeline at MetLife getting endorsed and the industry not picking up any of the retail loans displaced, we end up at a 55,000 level for the year. Most likely we will end up in the 56-57 thousand range.”

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In the coming months, the industry is likely to see May and June case numbers issued drop 11% to 15% as MetLife loan officers close out their pipelines without taking new applications, Lunde projects. “After that, the best case scenarios for industry volume would be to see an additional one to two months of transition as hiring, training, licensing and marketing start to ramp up for people going to new firms.”

The less optimistic timelines, he says, extend those estimates several months in the case of loan officers leaving the industry.

The fallout, however, doesn’t look that bad.

“Any way you slice it, we should all be expecting less than 60,000 endorsements for calendar year 2012,” Lunde says.

Written by Elizabeth Ecker

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  • RMI seems far too optimistic.  The fiscal year 2012 looks to be less than 56,000 at around 54,400 or so.  For the last three years the calendar year has been worse than the fiscal year.  Somehow RMI sees that turning around or the total for the fiscal year being much higher.

    If MetLife is accepting no new originations at this point, the vast majority of their HECM volume should be endorsed by September 30, 2012.

    The loss of MetLife will have little endorsement effect for this fiscal year.  That is why the HUD estimate of 84,000 and later others of 70,000 and more for the fiscal year seemed far too optimistic.

    HUD is convinced that the pull through rate we are now experiencing on a 12 month basis will be 5% less by year end.  If that is the case, we could down below 51,000 endorsements by year end.  

  • after all that has been said over the past year about comings and goings its clear that Wells Fargo had something so special that it will probably not be duplicated for some time or ever in this space

    • The same can be said about Bank of America but in a much shorter period of time.  The depository banks had a built in customer base which even insurance companies do not have.
      Wells was an interesting reverse mortgage lender which never fully developed its marketing potential.  Bank of America was the same.  It seemed neither wanted the negative impressions about reverse mortgages to flow over into their core business operations. 

      Because of their existing images Wells, MetLife and Bank of America had little problem recruiting some of the best originators in the industry with little effort.  They also were able to take on situations because of their deep pockets, few others could.

      So, yes, you are right few other entities can replace the impact which Wells and B of A had in our industry.  MetLife never showed the same potential because it lacked any real foot traffic from house rich, cash poor seniors.  It did well but it never would have driven HECM endorsements the way the Wells and B of A did.

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