Total reverse mortgage volume grew nearly 30% in the fourth quarter of 2014, with brokers leading the rise, the latest Reverse Market Insight (RMI) report shows.
Total home equity conversion mortgage (HECM) endorsement growth increased 28.9% to 4,851 loans in October, data show. The wholesale channel grew 37.3% compared to 23.4% for the retail/direct channel.
The nearly 30% gain in total HECM endorsements at the start of the fourth quarter is likely due to changes to principal limit factors (PLFs) that occurred last year, RMI President John K. Lunde tells RMD.
“The likely culprit is the PLF changes which occurred just prior to strong fundings in August and September,” he says.
The new PLFs made more proceeds available for some reverse mortgage borrowers.
On the wholesale side, Urban Financial of America LLC continues to lead all wholesale lenders followed by Liberty Home Equity Solutions and American Advisors Group (AAG), but AAG is the only one among the top three that has grown wholesale volume over the past 12 months.
Retail paints a similar picture as AAG is ranked first, but again is the only one grower in the past 12 months, followed by One Reverse Mortgage LLC and RMS/ Security One Lending rounding out the top three.
It’s rare for the same company to be the top grower by volume in both retail and wholesale, notes Lunde regarding AAG.
“It’s simply hard for one company to top the charts in two very different business channels for an extended period,” he says. “Part of that is simply consolidation of the industry as it’s somewhat easier to compete against a smaller number of competitors.”
Looking ahead, RMI predicts “the story will change in 2015 as Reverse Mortgage Funding is already making a push with considerable financial backing,” he says.
In December, Reverse Mortgage Investment Trust, the REIT behind RMF, announced it had filed with the Securities and Exchange Commission to raise up to $100 million in an initial public offering.
Read the latest report here.
Written by Cassandra Dowell