Brokers Buck Falling Reverse Mortgage Endorsement Trend

Home Equity Conversion Mortgage (HECM) endorsements took a slight hit in February, but brokers bucked the industry trend, according to the latest Reverse Market Insight report.

While HECM endorsements fell 4.5% in February, brokers’ volume showed an increase of 4.7%, RMI data show. The retail channel declined by 11%.

The HECM endorsement decline wasn’t large enough to be concerning, but one can rule out a decline in refinance endorsements as a cause of the decline in February, says RMI President John Lunde, adding that refinance endorsements rose from 501 in January to 526 loans in February.


“That’s a trend we continue to watch closely as we expect a decline soon given the pretty finite universe of borrowers that the 2014 Principal Limit Factors (PLF) increase and rising home prices helped enough to justify a refinance transaction,” he says.

Also bucking the overall industry decline in February were several lenders, including Live Well Financial, which jumped 40.8% — their highest level in over a year — and One Reverse Mortgage, which grew 8.7% to 500 loans without any help from broker business, notes RMI.

Liberty Home Equity, Reverse Mortgage Funding, and Urban Financial each grew 7% in the month, data show.

“Going forward, I’d expect to see pretty steady endorsement volume through the summer until financial assessment impacts start showing up in endorsement volumes around September,” Lunde says.

Access the latest RMI report here.

Written by Cassandra Dowell

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  • If the endorsement level does increase dramatically, there is a strong possibility that endorsements for the year could fall short of the totals for last year both on a fiscal and calendar year basis. That would make 2015 the worse endorsement year since 2005.

    Now is not the time to try to rosy things up. We should be sobered by the situation we find ourselves in. Even those who deal in HMBS securitization and love HECMs are not bolstered because of how poorly our endorsement production continues to trend. Yes, on a very short term basis we are doing a little better but when looking at the beginning of our entry into Ginnie Mae securitization our endorsements numbers have dropped from over 107,500 to less than half of that last fiscal year. Unless our endorsement numbers rise, HMBS investor interest will eventually wane. That is why the renewed interest of Fannie Mae in HECMs is helpful but compensation would be miserable.

    Until we have significant growth in endorsements on a sustained basis, looking at how one lender is doing versus another is little more than playing on lender hubris. We need real growth. Lender hubris destroyed what the Extreme Summit should have been.

    We need a real cooperation and collaboration among all origination entities to turn things around. Financial Assessment will not make that easier and focusing on the light and frothy helps no one. Analyzing failure for the purpose of avoiding that course of action again is not an easy chore but if we fail to do that then we are bound to eventually do it again.

    Could we have really reached 300,000 endorsements for the year 2018? Can we even reach 100,000 endorsements for a single year of endorsements by the end of this decade? Is there anything salvageable out of the Extreme Summit that will issue in bigger endorsement years for this year and next? After all the success or failure of the Extreme Summit was to be judged by how greatly endorsement numbers recovered and improved. Instead fiscal 2014 endorsements were lower by 14% from the total for fiscal 2013.

    We already know that calling Saver v3 the new reverse mortgage was not a smart move and did nothing to improve our endorsement count. Now with the advent of financial assessment it seems we have a “new” rut since once again we hear it Saver v4 being called the “NEW” reverse mortgage. Can we do better than that???

    • Thomas,

      If mandatory obligations are not at least 80% of the principal limit, how can they offer that deal?

      Are you saying that unless the mandatory obligations qualify the prospect for 90% that we are seeing the HECM form of bait and switch?? If so, are you sending the rate sheets along with other identifying information to HUD and/or NRMLA?

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