Retail Gains Drive December’s Reverse Mortgage Volume Growth

Home Equity Conversion Mortgage (HECM) endorsements closed out 2014 with considerable growth, an increase driven primarily by retail performance, according to the latest Reverse Market Insight (RMI) report.

While the overall industry saw HECM endorsements rise 12.1% in December from the previous month to 4,940 total units, it was the retail segment that led the way, posting a 14.7% gain during the month to 2,867 total units.

Wholesale, on the other hand, grew somewhat slower at 8.7%, leading to 2,073 units and adding to the full-year 2014 tally of 52,949 loans.

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Though it is unclear what has led to the increase in retail performance, it is the opposite of what is typically seen toward the end of the year, said RMI President John Lunde.

“Usually, the wholesale side is more volatile month to month, so in months with large increases like December we’d usually expect wholesale to rise faster than retail,” Lunde told RMD in an email.

Leading the way among the top-10 lenders, One Reverse Mortgage had a strong month in December, rising 45.9% to 540 loans, including both retail and wholesale channels.

Reverse Mortgage Funding, which experienced a dip in November, also had a strong December, posting a 34% growth in volume to close the month with 327 loans and wrap-up 2014 with a total of 1,651 loans.

American Advisors Group continued to hold down the top seat with a 25.1% market share as it recorded 1,257 loans in December, a gain of 12.3% from the previous month.

FirstBank also earned a notable mention in the December report after rising 50% to ninth place for the month and 13th on the year among the top-100 HECM Originators. In December, the company reported 51 loans, contributing to its year-to-date total tally of 416 loans. Year-to-date, the company experienced volume growth of 22.4%.

View the RMI report.

Written by Jason Oliva

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  • It is also good to say that endorsements for December 2014 rose 17% above endorsements for December 2013. That would be a great story except annual trends continue to fall.

    Calendar year endorsements for 2014 were 8,532 less than they were for calendar year 2013. That is a 14% decline. Further during the normal twelve month period for HECMs receiving case numbers becoming endorsed during a calendar year (from September of the prior year to August of the current calendar year), we saw case numbers decline by 9,573 for a 10% drop.

    Perhaps even worse the pull through percentage measured by the endorsements for a calendar year divided by the case numbers assigned during the normal twelve month period for HECMs receiving case numbers to become endorsements for a calendar year (from September of the prior year to August of the current calendar year) went from 65.88% for calendar 2013 to 63.21% for calendar 2014.

    While December 2014 brought us somethings to cheer about, it was not generally so for calendar 2014. Calendar 2014 was short of reaching our all time high endorsement total for a calendar year by over 50%.

    While calendar 2015 is looking better than 2014, we are barely into this calendar year as to endorsements. With financial assessment delayed, calendar year 2015 endorsements may be higher than those for 2014. Calendar year 2016 endorsements may end up being our worst year for endorsements in over a decade. Calendar year 2017 on the other hand is looking like a year where we may start seeing a trend of increases as long as expected interest rates do not get out of hand.

  • Jason,

    You need to correct the following sentence since actual endorsements for December 2014 were 4,940, not 4,490: “While the overall industry saw HECM endorsements rise 12.1% in December from the previous month to 4,490 total units….”

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