Reverse Mortgage Applications Fall 15% in September

Reverse mortgage applications for September fell 15.2%, according to the most recent Department of Housing and Urban Development data.

Falling to a total of 6,875 applications from 8,105 applications in August, September’s decline marks the second time this year reverse mortgage applications have fallen since April, with September falling harder than April’s 14.4% decrease. 

Additionally, September applications are down 7% from September 2011, falling in line with lower overall volume predictions for 2012 when compared to 2011.  

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Reverse Mortgage Application Trends

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The reverse mortgage trend aligns with the entire Federal Housing Administration application performance during the month; FHA reported 142,978 applications overall—down nearly 20% since August, although up 10.8% since September 2011. 

View HUD’s Outlook report for September

Written by Jason Oliva

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  • Let us not underestimate the impact of this news.  

    Not only are case number assignments (“CNAs”) lower for the first four months of CNA inventory for this fiscal year of endorsements but the annualized conversion rates as of September 30th and October 31st of this year are significantly lower than last.

    On November 30th we will have generated the six months (out of the twelve) of applications with CNAs from which the vast majority of endorsed HECMs for the six months ended March 31, 2013 will come.  A 7.4% lower starting inventory (CNAs generated in the four months ended September 30, 2012) for this endorsement fiscal year in relation to last is not a good sign nor is an over 5.6% drop in the rate for this September over last.  If these factors are a forerunner of this fiscal year of endorsements, we would most likely see an over 10.5% drop in the number of endorsements for this fiscal year.  That would put the total under 49,100 endorsements for this fiscal year; the endorsement total was over 114,600 for fiscal 2009.

    Remember we do not have the CNA figures for October, 2012 yet.  Recently several lenders were citing (in RMD articles) problems they were going to have because of Hurricane Sandy.  So can we reasonably expect CNA numbers for this October to be better than for last October?

    With one-third of the CNAs for this endorsement fiscal year already over 7.4% down from last and the annualized conversion rate expected to be worse for this fiscal year than last, why are some leaders still trying to declare endorsements will be better in the next few months?  Others will need to provide motive but a high standard of intellectual integrity and honesty in such claims seems greatly lacking.

    Optimism based in fact is wonderful.  Optimism founded in little more than froth deserves the disdain and derision it so richly earns.

  • Impossible to really know how much, but the continued attacks on the RM industry by the media certainly have affected volumes (NY Times, etc).  Home values have generally remained stable for a while now, so it’s not that.  Losing the name players (Wells, MetLife, etc) has reduced overall industry volumes.

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