Retail Still Outperforming Wholesale in Reverse Mortgage Volume

Reverse mortgage retail volume continues to outperform the wholesale/broker industry, showing a 12.2% increase in May for the retail side, while wholesale/broker volume saw just a 2% rise, the latest Reverse Market Insight (RMI) report shows. 

Total home equity conversion mortgage (HECM) endorsement growth increased 7.8% in May. 

Previously, retail showed a 0.2% gain in April, but the meager increase far outpaced wholesale’s 19.9% decrease in volume. 

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This outperformance has been fairly consistent throughout the past several years, says RMI President John K. Lunde.

“Retail has done better than wholesale over the past several years as regulations and costs increased for the business, which seems to reduce the capability for small brokers to thrive as independent companies,” he told RMD. “May fits within that context and doesn’t break new ground beyond what we’ve seen in the past, reaching up to the low 60s as [percentage] of total volume.”

Retail holds 59% of industry volume, just short of the 61% reached in September and December last year. 

American Advisors Group continues to lead the pack in retail and wholesale volume, with a new high of 1,481 loans, up 17.7% from April. RMS/Security One Lending rebounded with a 24.8% increase to 392 loans, and Proficio Mortgage rose 23.3% “to recover some of the losses from the past three months,” RMI notes in a newsletter on the report. 

View the latest Reverse Market Insight data. 

Written by Emily Study

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  • Why is so much space dedicated to HECMs which closed on average over 6 to 7 months ago? We are at the end of July and yet most of the information comes from HECMs which closed in December and January.

    What is surprising is that even as of May 2014, endorsements of Standards and Savers during fiscal 2014 exceed the endorsements of Savers v.2 (our current HECM) by 4,850 HECMs. The total endorsements for Savers v.2 through May 2014 is only 15,868 HECMs. Although we do not have the breakdown yet, we know that total endorsements for June 2014 was below 4,000 at 3,927. That means that the most Savers v.2 have done through June 2014 is less than 19,000 endorsements with Saver v.2 total endorsements still lower than endorsements for Standards and Savers (v.1) during this fiscal year.

    In the two HUD reports Reverse Market Insight uses to generate its monthly retail vs. wholesale report, there is information on HECM applications which received case numbers in May 2014. It is this information which is crucial to understanding endorsement volume for the next few months. (Why does the industry generally ignore it?)

    Based on case numbers assigned during February through May 2014 of 24,293 only about 15,730 more HECM Savers v.2 should be endorsed by fiscal year end. The anticipated results are that during fiscal 2014 about 2,900 Savers, 18,100 Standards, and 31,600 Savers v.2 will be endorsed for a total of about 52,600 HECM endorsements. Last fiscal year there were 59,917 HECMs endorsed and for the worst fiscal year HECM endorsement total since fiscal year 2009, fiscal year 2012 had 54,687 endorsements.

    It seems fiscal 2014 will set yet another low for endorsement totals since our peak endorsement year of fiscal 2009. Just looking at case number assignment trends, endorsement totals for fiscal 2015 could be worse yet. But then again it is much too early to be definitive about fiscal year 2015.

    So while the number of people over 62 years old in the US continues to swell, the volume of HECM endorsements lags, even diminishing. It seems some industry leaders are saying that it is an insufficient number of HECM originators which is the chief cause for this decline. What novel excuse will there be next?

    • You want to sell more cars…….then flood the sales floor with salespeople. You WILL sell more cars….unfortunately no one will make any money (except the owner of the business), people dedicated to the industry WILL leave, and all you’ll be left with are people that will do and say anything for the sale. It’s not the “boots on the ground” that is the issue, it’s the industry leaders that have failed over the last decade to properly position the product and get the message out. They were much too busy hammering their salespeople to sell Fixed Rate Full Withdrawal HECMS to the tune 0f 70%

      • Bob,

        If sales were simply a matter of more salespeople, then the executives of major American auto manufacturers failed their boards and shareholders by not bringing on more salespeople to sell the gas guzzling, big autos of Detroit during the end of the 1960s and the early 1970s as American tastes turned to German and Japanese made autos. And what about today; will that tactic save Detroit?

        You also ignore the point of diminishing returns. For example, if the car dealer fills the lot and showroom with salespeople, customers are left out in the cold (or heat). Where would sales be then? There is a point at which even sales decline if more salespeople are added.

        The art of selling more automobiles is far more complex than just maximizing the number of salespeople.

        Originating HECMs is not all about how many salespeople we have as you point out or even who they are as you chose to ignore. (Yes, sales will drop if all of the current boots on the ground sales force suddenly leaves the industry but even those sales can be replaced over time.)

        I disagree that it was the irresponsible overselling of fixed Standards (which there was) which led to lower HECM originations. It may be a factor but so are 1) lower principal limit factors than available in fiscal 2009, 2) the first year disbursements limitation, and 3) the new HUD position on fixed rate HECMs having to be closed end starting at initial funding.

        Yet I find it incredible that some industry leaders are declaring that if we just had more HECM originators, sales would rise since they could have easily done something about hiring and training a larger sales force decades ago. During early fiscal 2010, our sales force was swelled compared to what it is today, yet sales began to plummet back in early fiscal 2010, forcing many of them to leave the industry back then.

        Not only is the cry about the need for originators to increase sales disingenuous, but based on recent HECM history it seems to be some kind of ruse.

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