Reverse Mortgage Volume Falls, Lenders Climb the New Top-10 Ranks

Reverse mortgage endorsements fell 3.4% in May to 4,439 loans, with lender competition facing a 5.6% decline. For retail and third-party originator volume, the Top-10 for lenders shuffled once again, with One Reverse Mortgage, Urban Financial Group and Genworth Financial Home Equity Access rising to the top as Wells Fargo and MetLife numbers begin to make their way off the books, according to the latest data from the Department of Housing and Urban Development and Reverse Market Insight.

The monthly volume, which RMI says is “flirting with the multiyear lows we saw in March,” could see lower volume still in 2012 as MetLife’s exit from the business continues to pull volume down a bit, RMI predicts.

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Source: Reverse Market Insight

Lenders now in the Top 10, however, don’t seem to be going anywhere. Generation Mortgage, Security One Lending, First National Bank of Layton and Reverse Mortgage USA all saw volume grow month-over-month in May, with the Top-10 for volume in 2012 to date comprising One Reverse, Genworth, Urban Financial, Security One and Generation in the top five and AAG, First National Bank of Layton, Sun West, Reverse Mortgage USA and New Day Financial rounding out the remainder of the list (again, excluding MetLife).

Many wholesalers are also seeing a growth opportunity with new entrants into the market as well as growth in channels launched in 2011.

View the RMI report for reverse mortgage volume by lender.

Written by Elizabeth Ecker

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  • The continuing trend is for an endorsement fiscal year of 55,000.  If the fiscal to calendar year trend for the last three fiscal years holds, there is some possibility that the total for the calendar year could be less than 50,000 although that is not the most probable total right now.

    The problem with saying too much this month is that the total case number assignments for April, 2012 has yet to be released by HUD.  This is the first time in recent memory that the report on the endorsements for the prior month has been released before the Outlook and HECMs Characteristics reports for the month that preceded the prior month.So right now we have the endorsement reports through May 2012 but HUD is still working on the Outlook and HECM Characteristics reports for April 2012.  That kind of delay means any projection of fiscal and calendar year endorsements is far less reliable than it should otherwise be.

  • Late this morning HUD released its Outlook report for April 2012.  The good news is Case Number Assignments were up slightly more than anticipated.  It gives some prospect of the endorsements this fiscal year reaching 56,000.  It also seems to trend toward 52,000 for the calendar year.

    The bad news is that HECM endorsements for either year end have a strong likelihood of ending less than 50% of the total HECMs endorsed during the fiscal year ended 9/30/2009 of 114,692.  This is a miserable total which is probable to go down even further next fiscal year.

    We would expect to see Case Number Assignments for May 2012 to be less than 7,000 and most likely around 6,100.  Hopefully HUD will issue its Outlook report before July 7th.  So far in the twelve month period ended April 30, 2012, Case Number Assignments are running about 20,000 less than they did for the same 12 month period last year.

    Endorsements, on the hand, for the twelve month period ended May 31, 2012 are running 13,500 behind that total for the same twelve month period last year.  That is 18% lower but based on the even lower pull through rates we are currently experiencing, expectations are that the difference by year end will be closer to a 23% reduction from the endorsement total of 73,131 for last fiscal year.

    Although nothing to write home about, the HECM for purchase saw over 150 endorsements and Savers were near 350 endorsements for the month of April.  The pull through rate on an annualized basis is near 67% and the ratio of fixed rate Standards to total Standards endorsed during this fiscal year hovers at about 72.5%.

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