While home equity conversion mortgage (HECM) endorsements in September decreased 19% year over year, some regions of the country show promise for reverse mortgage lenders, the latest Reverse Market Insight (RMI) report shows.
With just under 4,000 endorsements this past September, the month came in right on top of 2012’s total, “which is interesting given that [that] year is the benchmark for whether 2014 will set a new low in calendar year volumes,” RMI President John K. Lunde writes in his commentary.
In 2012, there were 52,883 HECM endorsements, and as of September this calendar year, RMI data shows there have been 38,751 endorsements.
Previously, RMI estimated that endorsements in October, November and December would total between 3,500 to 4,000 per month, which would put the industry right around 50,000 endorsed loans for the year.
“Given that we’ve been running just slightly below 2012 January through September, it sets us up to have a good shot at meeting or exceeding 2012 levels to avoid setting a new low this year,” Lunde says.
Despite the lackluster totals overall, Lunde spotlights one area of the country that offers more opportunities for reverse mortgage lenders: Sacramento, Calif.
Though it has a long history of reverse lenders being headquartered or keeping an office in the area, the growing city is a relative newcomer to the ranking tables with more than $28 million in total Max Claim Amount for loans written year to date – an increase of $4.95 million from last year.
“That volume has been pretty spread out across the city and among several lenders, but if you haven’t originated there recently take another look at this hidden performer,” Lunde writes.
Other areas are well positioned due to their refinance activity and market factors, RMI finds.
“Several areas are seeing significant refinance activity, generally driven by recovering home prices and a large installed base of HECM loans,” Lunde says. “The other areas that stand out on those fronts would be Southern California, Washington, D.C., Baltimore and Philadelphia.”
To access the report, click here.
Written by Emily Study