New Lows: Reverse Mortgage Volume Falls Short in 2014

Despite record performance for some individual reverse mortgage lenders in 2014, the industry as a whole sank in volume for the fiscal year ending September 30, according to endorsement data from the Department of Housing and Urban Development (HUD).

The agency shared its Home Equity Conversion Mortgage (HECM) program data with attendees of the National Reverse Mortgage Lenders Association (NRMLA) annual conference in Miami this week, with a final count of 52,000 HECM loans on the books for 2014.

That compares with 60,000 loans in 2013 and falls short of the previous low annual count of 55,000 in 2012.


The effects of 2013 program changes are being felt, HUD says, but perhaps not as much as had been anticipated.


“We feel [the industry] made it better than one might have expected,” said Karin Hill, HUD ‎director of Single Family Program Development, speaking on a panel during the NRMLA conference.

A shift in loan composition away from fixed rate loans was to be expected, she said, but marks a positive improvement in the program from HUD’s point of view.

The composition of loans shifted from 61% fixed rate and 39% adjustable rate in 2013 to 19% fixed rate and 81% adjustable rate in 2014.

“It has been hard to keep up with the changes, but we feel we are starting to see results that are moving us in the right direction,” Hill said.

Written by Elizabeth Ecker

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  • HUD looks at endorsements but the industry looks at revenues. Origination revenues have not just been decimated but have been devastated. With adjustable rate switching with fixed rate as to popularity, tails revenues should be proportionately much larger per HECM originated after September 29, 2013; however, tails revenues will not make lenders whole since TPOs do not participate in tails revenues and principal limit factors are so lower than those of fixed rate Standards a few years ago.

    With HUD justifying their recent decision through the use of endorsements and not revenues, we begin to get the picture that HUD will not take principal limit factors much higher as long as endorsements stay higher than the low 40,000 range. So even though demographics draw interest from investors and lenders, we can expect to see that interest go lower as these parties understand the impact that the September 30, 2013 changes (and subsequent tweaks) have on the potential revenues the industry might produce. With financial assessment on the horizon, even endorsement numbers might not be spared. Time will tell.

    Like others, I am looking at opportunities outside of our dinky industry; however, this does not mean my interest in the industry or those we will serve is likely to diminish any time soon.

  • Think about what might happen in this industry if we were to use the incoming financial assessment tool as a way to truly assist seniors in need of financial stability instead of just driving them away by sticking more restrictions in their way or instead choosing prospects from the ranks of people who don’t need it. This could be the return of the numbers we all want. It would be a shame to waste it on mean spirited regulation instead of revitalization of the industry with tools to help not hurt the very people we pledged to serve. Let’s contribute to a system that generates what we came to do by providing FA tools to help restructure senior finances. It could still be done by paying attention to making these tools help and not hurt even more than we have already. There is still hope to finish this task professionally and not give in to anger and remorse and walk away in failure.

    • wstrycker,

      What a ridiculous idea. You are NOT suggesting professional behavior. While you like Robin Hood might think it makes sense, there is no Prince John or Sheriff of Nottingham.

      If you do not like financial assessment the way it is, use these next three plus months to contact HUD and get it changed. No one is asking you to follow the financial assessment rules; your employer should be demanding you to follow them.

  • Don’t expect the implementation of Financial Assessment to improve the current trend in volume, but the turnaround WILL come and it will ultimately strengthen both the program and the industry.

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