Reverse mortgage volume rose more than 20% in March marking the highest level of lending since June 2011, new Department of Housing and Urban Development shows. The rebound can be attributed to both new consumer demand and a sustained level of home price increases, according to analysis by Reverse Market Insight.
Also coming into play is a last minute push reported by lenders and industry vendors during the weeks and days leading up to April 1—the date which marked the beginning of a suspension of the fixed rate standard reverse mortgage product under the Federal Housing Administration.
At 8,593 endorsements, March marks the highest level since June 2011, also aligning with the last month of Wells Fargo originations before the former largest lender exited the business in 2011.
“It’s a significant hurdle for the industry to cross and shows the power of recovering housing markets to drive reverse mortgage volume,” writes RMI in its report.
Supporting the recovery is stronger consumer demand, resulting in higher case number conversions, measured at 79%—also comparable to levels not seen since 2011, RMI writes. Combined with a sustained home price rebound seen in many regions across the country, the upward movement is putting positive pressure on the market for reverse mortgages for the time being.
That pressure could be interrupted by the current changes, and more critically, but future changes that are expected from FHA by year-end.
“Putting these trends together, it’s no surprise that endorsement volumes are trending higher,” RMI writes. “In our view the suspension of HECM standard fixed won’t change this trend meaningfully, but 2014 and beyond could show significant impact from changes FHA makes to the HECM program by September 30 to respond to MMI fund weakness and legislative pressure.”
Lenders repositioned among the top 10, with Proficio Mortgage joining the ranks at No. 7 with 522 loans year to date.
Maintaining the highest endorsement volume among lenders was Liberty Reverse Equity Solutions (formerly Genworth Financial Home Equity Access) at 2302 year to date, followed by Security One Lending and American Advisors Group in year-to-date terms.
Regionally, RMI reports, seven of 10 regions saw 12 month reverse mortgage volume highs including the seven regions that are meaningful to national trends.
Written by Elizabeth Ecker