Has the Reverse Mortgage Industry Recouped MetLife Losses?

Reverse mortgage endorsements are down year over year, which is not news to those working in the business. However, the latest data released by the Department of Housing and Urban Development, after analysis from Reverse Market Insight, may show that the vast majority of MetLife volume has remained in the business through other lenders. 

Endorsements, up 6.6% in August to 4,122 loans, still represent a sustained low after reaching the lowest level in years during the previous month. Bouncing back after the decline in nearly every geographic region, the count is still down on an annual basis, which many people may attribute to lender exits. 

RMI points out, however, that more than three quarters of MetLife’s volume has remained following the company’s April exit from the business. The observation is based on case numbers issued in July, down just 3.5% year over year. 


“This is a particularly interesting comparison since it presents the first picture of how much Metlife’s exit has affected the industry’s earliest leading indicator of volume,” RMI writes. “We never rely too heavily on one data point for conclusions, but that seems like a pretty good performance given that Metlife’s retail channel was 17.5% of industry endorsements Nov 2011-June 2012. This suggests 80% of Metlife’s retail volume is now being generated by other lenders, a much higher retention figure than Wells and BofA exits.”


Given the widespread branch networks of Wells Fargo and Bank of America, this might be expected. Additionally, much of the MetLife origination team landed with a single lender—Security One Lending—earlier this year. 

Security One posted strong gains during the August, up more than 46% since the previous month. 

View the Reverse Market Insight report

Written by Elizabeth Ecker

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  •  “Additionally, much of the MetLife origination team landed with a single lender—Security One Lending—earlier this year.”

    The reason endorsements were held at a higher level has much, much, much, more do with with the talent and dedication of ex Met originators than is has to do with a bunch landing with a single lender. I am one of the many ex MetliLe employees who do not work for S1L and I didn’t lose a single deal. So lets give credit where credit is due.

    • Alias Bob, 

      If the MetLife people are so talented and dedicated why in the world have our endorsement numbers been so bad the last two months?  Here I thought most of them were employees of Wells Fargo and Bank of America long BEFORE they were terminated by MetLife.
      When most of those same former WF and B of A employees left WF and B of A, we saw an over 20% drop in endorsements from which the industry has not recovered.  Some in the industry believe that this loss cannot be recovered even when higher endorsement levels return because of the type of senior to whom this type of marketing uniquely appealed.

      MetLife did not have that same image, the same level of foot traffic, or the same branch structure as the WF and B of A, so the loss in endorsements to the industry should not be as great as a result of MetLife leaving.

      People who believed the loss of MetLife would impact our production levels after a couple of months, seem overly worried about little.  It did and should have had an immediate impact and might have a long-term negative impact but between now and then, we should not see much of an impact due to this loss.  Long-term the loss of these huge industry giants could impact how quickly other large bank and insurance companies will come into our space and could be an added but less significant factor for at least one or two other large lenders leaving our industry.

  • Are our low endorsement numbers SOLELY due to fewer case number assignments (also incorrectly referred to as applications) today?  What if we had the same number of case numbers being assigned today as we had in late 2007, would the number of endorsements be up or down compared to 2007?  Are the experts ignoring the biggest problem?  If so, why? 

    To get some idea of how really big the problem has grown into, let us look at where we were on August 31, 2012 and where we were on October 31, 2007.  During the twelve months which ended August 31, 2012, our industry generated 56,726 endorsements and during the twelve month period ended October 31, 2007, the industry generated 107,254 endorsements, for a difference of 50,528. Now let us look at how many case number assignments it took to generate those endorsements.

    Using the four month rule of thumb (which says that it takes on average four months for an application to get endorsed once a case number is assigned), it took just 111,822 case numbers assigned between July 1, 2006 and June 30, 2007 to generate the 107,254 endorsements for the twelve months ended October
    31, 2007.   To generate 56,726 endorsements for the twelve months ended August 31, 2012 took 86,297 case number assignments between May 1, 2011 and April 30, 2012.  So the conversion rate for October 31, 2007 was 95.91% while the conversion rate was 65.73% for August 31, 2012.

    If we had had 111,822 case number assigned in the twelve
    months ended April 30, 2012, with our current conversion rate of just 65.73%, we would have only generated 73,501 endorsements.  That is 33,749 fewer endorsements than in October 2007!!  So how many of the 50,528 fewer endorsements actually resulted from fewer case numbers being assigned?  That is simply the product of the difference in case numbers assigned (or 25,525) and our
    current conversion of 65.73%.  That product is 16,779. 

    So of the 50,528 fewer endorsements, 33,749 come from a lower conversion rate and only 16, 779 from fewer case number assignments.  While the lower conversion rate is not easy to explain, taking the easier route of just looking at case number assignments seems more like diversion and distraction from the bigger cause of lower endorsement numbers. 

    So why are the endorsement experts who provided the information to RMD focused on case number assignments when the conversion rate is by far the bigger issue?  CPAs deal with trying to measure various causations, not what motivates alternative explanations.

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