These Are the Hottest Reverse Mortgage Markets in 2015 Right Now

Nationally, reverse mortgage volume hit a snag in July after a surging June, but some markets stood against the grain by bucking the industrywide decline with some substantial growth.

Total endorsements for Home Equity Conversion Mortgages (HECMs) dipped 5% to 5,029 loans in July, compared to the previous month’s 5,296 total, which was the highest level since August 2013, before utilization restrictions were implemented, according to industry data from Reverse Market Insight (RMI).

But while the overall industry grapples with volume pressures in the months following one of the most significant changes the HECM program has ever seen with the Financial Assessment, several markets across the country have experienced growth upwards of 30% year-to-date in July.

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Of the 81 markets tracked by RMI, Orlando reported the highest volume growth year-to-date in July compared to the same period last year. Year-to-date in July, Orlando recorded 546 loans, representing a 37.9% increase over the market’s production from January to July in 2014, when it reported 346 loans.

Orlando posted the highest growth of any market in the Southeast/Caribbean region, though in terms of loan count, Miami took command with 1,215 loans year-to-date in July, up 26% compared to the same YTD period in 2014.

Also within the region is Tampa, which produced 30.5% more volume YTD in July this year with 714 HECM endorsements. Taken together, Tampa’s and Orlando’s volumes YTD in July represent 18% of the Southeast/Caribbean region’s total volume during this period.

Significant volume growth was not just reserved for Florida and the Southeast. The Pacific/Hawaii region also played home to two markets that saw at least 30% growth YTD in July when compared to last year.

Overall, HECM endorsements fell 9.4% on a monthly basis in the  Pacific/Hawaii region in July. However, the region’s production in the first seven months of 2015 was 7,772 loans, an increase of 13% from the 6,875 recorded during the same period in 2014.

Leading the charge here in terms of growth were Las Vegas (323) and Fresno, Calif. (300), which saw YTD volume in July grow 34.6% and 32.7%, respectively.

The volume in these markets, however, were dwarfed by Los Angeles’ 1,871 loan count, Santa Ana’s 1,510 and San Francisco’s 1,315—representing YTD July growth rates of 13.5%, 22.5% and 16.7%, respectively.

Written by Jason Oliva

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  • This following sentence shows no recognition for the time it takes for an endorsed HECM to go from an application with a case number assigned to endorsement: “But while the overall industry grapples with volume pressures in the months following one of the most significant changes the HECM program has ever seen with the Financial Assessment, several markets across the country have experienced growth upwards of 30% year-to-date in July.”

    It is hard to believe that even 15% of the applications endorsed during July 2015 were from applications which had undergone financial assessment. Before the onslaught of financial assessment, the average time lag between case number assignment and endorsement was about four months. The first HECM applicant to be subject to financial assessment saw his/her/their application receive a case number assignment no earlier than April 27, 2015.

    With the delays we have been hearing about in processing and underwriting due solely to financial assessment, it is very unlikely that a significant number of the applications receiving case number assignments from April 27, 2015 to May 31, 2015 will receive endorsements any time before September 2015.

    So it would seem that the growth in endorsements in some markets during July has more to do with a rush of applications coming in during March and April, 2015 in order to beat the case number assignment deadline of April 27, 2015 so that the related applicants could escape financial assessment.

    The fact is that only 4,184 case numbers were even assigned during May 2015, the first full month of applications receiving case numbers where the related applicants are subject to financial assessment. That is the lowest such total since January 2005 when the total was just 3,896. During July, the conversion rate for applications with case numbers assigned turning into endorsements was 59.263% which is the lowest such rate since December 1992 when it was just 56.098%. If that rate applies to the applications receiving case number assignments during May we will see less than 2,500 endorsements from that cohort of applications.

    Yeah, yeah, we keep hearing how things are almost recovered following the implementation of financial assessment but the facts so far based on public information released from HUD does not match that ultra optimistic view.

    • Right on Cynic, some reporting on our industry is certainly lacking and this is a good example. We are barraged with meaningless percentages which swing wildly from positive to negative without much in the way of critical analysis or evaluation by those reporting the data.

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