California Cities Dominate Reverse Mortgage Volume Growth

Though first quarter reverse mortgage endorsements have largely declined nationally compared to year-ago levels, many cities are experiencing growing dollar volumes by the millions—most notably in California, according to the latest Reverse Market Insight data.

On a national scale, endorsements for Home Equity Conversion Mortgages (HECMs) are down 6.3% in the first quarter of this year when compared to what they were during the first quarter of 2013.

The volume downtrend for HECM endorsements slumped to a 12-month low in April, where volume declined 9.7% from the previous month.

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Despite the quarter-over-quarter—as well as the monthly—dip in HECM volumes, RMI notes there are still some “sunny spots” where dollar volumes have grown substantially over the past year, though these areas appear to be largely concentrated in Western states, particularly California.

The state claims seven of the top-10 cities for total MCA growth, with San Diego leading the way with a $54.7 million increase in aggregate maximum claim amounts during the quarter, an $18.4 million jump from the same time last year. 

California also swept the top-10 zip codes for total MCA growth, with Oceanside (92056) and Walnut Creek (94595) ranking #1 and #2, producing approximately $7.6 million and $7.8 million for the quarter, respectively.

Among the top-10 reverse mortgage lenders, American Advisors Group continued to hold down the top spot during the quarter with 1,870 loans year-to-date. In April alone, the company racked 1,194 loans.

One Reverse Mortgage finished the quarter at the number two spot with 1,233 loans, while RMS/Security One Lending rounded out the top-3 with 1,199 loans, respectively.

Access the RMI data.

Written by Jason Oliva

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  • Now on the topic of California and high home values . Does anyone have any idea when a normal looking jumbo reverse mortgage will be coming to market? Outside of the 8.875% jumbo currently available at Generations.

  • There is a fundamental myth in our industry that as the population of the US over 62 (defined herein as the senior population or seniors) grows so will the HECM industry. In the last five years we have seen HECM endorsements go down and actually cut by over half of what they were in fiscal 2009 while the senior population is taking off. Many try to explain this oxymoronic fact by anecdotal evidence to no avail. It is as if the industry has taken this on the chin and refuses to investigate what is causing this contradiction to fundamental “principle and belief.”

    To understand the success and failures of HECMs we need to go no further than looking at California and Florida. In the world of HECMs each is an oxymoron in the sense that what they are in the way of senior concentrations does not explain how well HECMs do in those states.

    Look at Florida, our sunshine state. It is the fourth largest state by population. By population it is slightly more than one-half the size of California. Compared to California and the rest of the US, the concentration of seniors in that state is disproportionately high. Florida is the retirement destination of many in the snowy regions northeast of the Mississippi River Valley. California on the other hand with its high cost of living loses more seniors annually to migration out of California than seniors moving into California.

    You would think Florida with its net migration into the state would not only see a higher proportion of Traditional HECMs but would also be the Mecca of H4Ps. Yet neither is true. Even a state like Ohio leads Florida in H4Ps and a state like California with a net senior population migration out of the state is the strongest producer of HECMs both in raw numbers and proportion of HECMs to seniors among the major states. It would seem that factors other than those we generally recognize or understand as determinants are at work here. It would behoove our industry to move beyond accepted ideas to understand what determinants cause seniors in California to accept HECMs over those in the more highly concentrated senior populations of the sunbelt states.

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