While U.S. Department of Housing and Urban Development (HUD) data suggest a decline in reverse mortgage originations over the past six months, reverse mortgage technology and software provider ReverseVision, Inc. says reverse mortgage volume is actually trending up.
Using ReverseVision’s RV Exchange (RVX), a reverse loan origination system (RLOS) and lending system of record for many reverse lenders, the company compared RVX data against HUD data to find a sharp increase in volume at the end of 2013 resulted in significantly delayed endorsement numbers — often as much as by six months.
Lender prospect pipelines are rebuilding and new loan applications are rising at a modest, yet consistent pace after the large drawdown of the fourth quarter of 2013, says Rob Katz, executive vice president of ReverseVision, in a release. Closings have also been consistently climbing from their low in January, according to Katz
“There is a misperception that reverse mortgage loan volumes have been on the decline in 2014, hitting a low in June,” Katz says. “But this observation is nearly always based on the only publicly available information regarding loan volume in the industry, which is a HUD Endorsement report, rather than actual closed loan data.”
FHA requires a lender to process a request for insurance endorsement within 60 days of closing a HECM loan, meaning HUD endorsement data lags actual closing counts by up to 60 days and sometimes more.
In addition, when a volume bubble occurs, such as the industry experienced in the fourth quarter of 2013, often lenders cannot process endorsement requests for their loan production within FHA’s standard of 60 days.
See ReverseVision data here.
Written by Cassandra Dowell