Two months into the year home equity conversion mortgages (HECMs) fell from last year’s comparable period, but HECM to HECM refinance figures climbed, the latest Reverse Market Insight (RMI) report shows.
HECM endorsements are down by 5.5% in February from February 2014, while refinances made up 11% of endorsements compared to 10% in January and 4% in February 2014, data show.
“HECM refinances have been a significant theme in the past six months, sparked by the increased principal limit factors (PLFs) from FHA in August 2014 coupled with rising home prices in the past few years,” says RMI President John K. Lunde. “We expect the refis to taper off since there are only so many loans that show significant refinance benefit right now, but as of February endorsements it hasn’t happened yet.”
Falling HECM endorsements reflect the same trends seen in RMI data comparing February to January 2015 reverse mortgage volume, notes Lunde.
“It’s not a huge decline, but it’s always something to keep an eye on,” Lunde says. “We don’t expect to see big swings until August/September when the financial assessment starts impacting endorsement numbers.”
Top three states California, Florida and Texas improved their year-to-date growth rates from January, with California and Florida also being the only states showing growth over last year so far — at 3.1% growth and 16% growth, respectively.
“It’s somewhat surprising that only two of the top 10 states have grown year to date, but it just means that the industry decline is mostly being felt in the states ranked 3 to 10,” he says. “To give a sense of this, the 367 loan drop in these states is 65% of the national decline. There were 20 other states outside the top 10 that grew or stayed flat, like Nevada (+58.9%) and Idaho (+32%).”
Virginia improved from January, but showed the worst year over year decline among the top 10 states.
View the latest Reverse Market Insight data.
Written by Cassandra Dowell