Despite December Drag, Reverse Mortgage Volume Up 15% in 2013

The total number of home equity conversion mortgage (HECM) loans jumped 15.3% in 2013 despite a double-digit drop in December, according to the latest Reverse Market Insight newsletter.

With a full year’s worth of HECM data in the books, endorsements fell 10% to 4,223 loans in December 2013 for a yearly total of 61,122. 

“It’s perhaps fitting that the year in which we saw loan volume grow for the first time since 2008 but also the most significant product changes in the HECM program history ended with December just barely exceeding the lowest volume of the year (October),” says the RMI newsletter. 

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In December, five of the industry’s top 10 lenders marked increases from the previous month, while all but Generation Mortgage tallied year-to-date gains.

Security One Lending/Reverse Mortgage Solutions, with an industry-leading 676 loans in December, tallied an 81% year-to-date increase and a 16% market share. American Advisors Group’s 621 December loan volume was down 9% from the previous month, but marked a 100% year-to-date increase from 2012 with a 14.7% market share. 

One Reverse Mortgage LLC, with 376 loans in December, Urban Financial Group, with 211 loans, and Liberty Home Equity Solutions Inc., with 175 loans, round out the top 5 lenders for December 2013.

Other lenders with notable growth in 2013 include Proficio, which grew 466% to notch the #6 spot and Open Mortgage, ranked thirteenth after growing 154%.

Considering the major reverse mortgage changes announced in 2013, RMI says the year can effectively be split into two eras: Before and after the April 1st product changes when the Department of Housing and Urban Development discontinued the HECM standard. 

The September changes have not yet significantly affected endorsements, but are likely to start having a larger impact through February. 

“Here’s hoping for a resumption of the uptrend in 2014, but right now application and funding volumes suggest another leg down for endorsements from 9/30 changes before any recovery will begin,” says RMI.

Access the RMI HECM Lenders Report for December 2013. 

Written by Alyssa Gerace

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  • It is odd how low lenders like Urban and Liberty were in comparison to the top two lenders. With the recent addition of the Reverse Mortgage USA employees, AAG should have a great 2014 in comparison to the other five top HECM lenders.

  • Reverse Mortgage Insight (“RMI”) makes an interesting, although misleading, observation. Since September 2013 endorsements have been less than 5,000 monthly while during the six months ended August 2013, monthly endorsements were never less than 5,000.

    If we compare total endorsements for the four months ended December 2012 to that same four month period ended December 2013 we find that total endorsements actually increased by 11.6% (15,799 endorsements for the earlier period and 17,628 for the latter). During the four months ended December 2012, three of the four months had less than 4,000 endorsements while none of the months during the four month period ended December 2013 had less than 4,000 endorsements.

    While endorsements are significantly up for the last four months compared to the same four month period during 2012, it is not clear what that means for the remainder of fiscal 2014 or calendar 2014.

    So it is not exactly clear why RMI concludes in its most recent report the following: “…right now application and funding volumes suggest another leg down for endorsements from 9/30 changes before any recovery will begin.” Endorsements certainly do not give that picture and RMI failed to present application information.

    None of us knows what only having essentially Saver products (with slightly higher upfront costs) will mean as to endorsements from this point forward although it does bode well for explosive growth. Most industry prognosticators are predicting something less than 50,000 endorsements for 2014. Until the FHA production report for December 2013 comes out (probably in late March or April 2014), we will not know what the future of endorsements will look like for the industry.

    • Thanks for your comment. We are able to review (but not publish for public consumption beyond our subscribers) the application and funding volume trends for a majority of the industry through year end. Given the declines we’ve seen there since 9/30 changes took effect, we’re expecting further declines in endorsements from current levels in the very short term.

      • John,

        I agree with your generalization about expected endorsement declines in total annual endorsements but forego commenting on the rationalizations you present until HUD posts its monthly production reports covering the last four months. At the moment there is a strong probability that the total annual endorsements for fiscal year 2014 and (even more likely) calendar 2014 will be less than for calendar 2012 (yes, 2012), the lowest annual total endorsements for either fiscal or calendar years in the last eight years.

        Financial assessment combined with lower PLFs and the new first year disbursement limitation will do more harm to endorsements during both fiscal and calendar 2014 than even the (very slowly developing) Extreme Summit can offset.

        Can RMI reasonably (not necessarily accurately) measure the impact of the Extreme Summit and, if so, will RMI publish such information to anyone other than the Extreme Summit financially participating lenders?

        I appreciate what RMI provides the industry. Keep up the good work.

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