Reverse Mortgage Volume Flat as Financial Assessment Looms

Reverse mortgage volume was mostly flat in January from December, and the biggest impact to endorsement growth this year is only less than a month away.

Home Equity Conversion Mortgage (HECM) endorsements rose 0.1% in January from December to 4,946 loans, according to Reverse Market Insight data on HECM endorsement data through January 2015. 

While the slight increase signals a modest start to 2015, there is still time before program changes like the Financial Assessment begins affecting volume.

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“It’s a decent way to start off the new year, but as seems to always be the case we’re expecting the biggest story for volume this year to be related to an FHA change in the program,” writes RMI. “Financial Assessment rolls out in March, which should start affecting endorsement figures in June/July.”

Until then, most regions have reported monthly gains in HECM volume for January, with six out of 10 areas having increased endorsements from December.

One of the most notable rises came from the Pacific/Hawaii region, whose 1,269 loans signify an 13.2% increase from the previous month and puts the area at its highest level since March 2011, according to RMI, which notes the monthly volume nationally was 47.7% higher at 7,306 loans back then.

“Home price appreciation has been a big factor, with many areas in Pacific/Hawaii seeing more appreciation,” RMI President John Lunde told RMD. “That has created more opportunity in many historically strong markets like the inland counties of California, Vegas and Phoenix.”

The regions of New York/New Jersey and New England also reported strong showings in January with volume growth of 23% and 12.6%, respectively.

Compared to other regions, HECM volume fell the most in the Southeast/Caribbean, dropping 15.3% in January to 971 loans, followed by the Midwest, where volume declined 13.8% to 461 loans. 

Whereas 60% of regions reported volume growth during the month, only three of the top-10 reverse mortgage lenders experienced gains. 

RMS/Security One grew 29.8% to 645 loans, which RMI notes as the company’s strongest showing since last February when it recorded 660 loans.

Urban Financial of America grew volume 10.8% to 381 loans in January, while American Advisors Group rose 4.9% to 1,219 loans, retaining its spot as the top lender with total volume of 12,654 loans from February 2014 through January 2015. 

View the RMI report. 

Written by Jason Oliva

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  • It all sounds great until you go back and read that January was barely better than December. Not mentioned and even worse is the over 2% drop in January 2015 endorsements compared to those for January 2014.

    While endorsements in July will be impacted by financial assessment, it is unclear how endorsements will do in the next five months although case number assignments in October 2014 and November 2014 were substantially up compared to those same months in 2013.

    Endorsements for fiscal 2015 have a chance of being marginally better than for fiscal 2014 but that is not saying much since the endorsement total for fiscal 2014 was the worst in nine fiscal years. Yet it is fiscal 2016 where we will feel the first full year impact of lender financial assessment on endorsements. The most probable outcome for the endorsement count for fiscal 2016 is that count will be the worst in 12 fiscal years (and a possibility of perhaps 13).

    It is somewhat disturbing that the probability of fiscal 2015 even reaching 55,000 is so low especially after the large investment of money, time, talent, and energy the industry placed into the Extreme Summit. It is even worse that there is the possibility that total endorsements for fiscal 2015 maybe worse than for fiscal 2014. It seems we are telling seniors that the latest version of HECMs is the best yet for seniors while they are telling us something entirely different.

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