Reverse Mortgages: Still a Growth Business

The reverse mortgage market may see much less of an impact from MetLife’s exit from the business than initially thought, writes a report this week from Reverse Market Insight noting the rise in volume in June to 5,182 loans. 

Endorsements during the month were up more than 17% over May. Still down year-over-year, volume looks to be stable going forward, RMI projects.

The biggest comparison to draw is between the relative impact of MetLife’s exit versus the impacts of Bank of American and Wells Fargo when they closed reverse mortgage operations in 2011, RMI notes. 

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“It’s entirely too early to have any final conclusions but it would appear to be a more positive trend than we were expecting,” RMI writes.

Given that Bank of America and Wells Fargo had bank and mortgage branch operations, while MetLife’s business segment was largely independent, RMI expects better retention of its reverse mortgage volume relative to the other banks. 

Ultimately accounting for all of the market influences, the business would have grown, had it not been for the exits in 2011, RMI finds, looking at the following chart.

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“Looking at the case numbers by lender underscores our theory that the one factor keeping the industry from seeing year over year volume growth is major lender exits. Case numbers from 2011 show that each of the first six months of 2012 would have shown an increase over last year if Wells Fargo and BofA are excluded,” RMI writes. 

“This chart suggests that reverse mortgages are still a growth business – something that might be more obvious from top line numbers once major brands/lenders stop exiting and perhaps other bold companies jump into the fray.”

View the original RMI report

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  • Perhaps the reason why the surviving lenders are growing is that they hired so many of the “boots on the ground” originators who left the major lenders at or near the time those lenders left the industry and at the same time the surviving lenders have kept their own originators.

    It is astounding to read that endorsements are growing when total endorsement volume is still heading down.  Until endorsement numbers go up year over year, this interpretation WILL help some feel better about an industry still in decline.

    But why look at the distant future?  July 2012 had the worst monthly endorsement total in years.  While employment transition could explain a great deal of the reduction, there is insufficient data to leap to the conclusion that all of the loss was due to this source.

    If RMI is right, we should easily exceed 60,000 endorsements for fiscal 2013 UNLESS another one of the major lenders (as defined by RMI) drops out.  Based on trends, total endorsements for fiscal 2013 looks like they will be less than 50,000.

  • Strange to hype this report a month late. Endorsements in July were down 25.4% to 3,868. The last 12 month running total is 58,410. As of today the FHA Outlook for July has not been posted showing monthly case numbers. All this is public info. You can easily find specific lender numbers using HUD’s Neighborhood Watch.  

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