There have been many measures of the recent decline in reverse mortgage volume following the implementation of the new financial assessment rule that has been in place since the end of April.
From secondary market estimates that show a small downturn in reverse mortgage securities issuance, to case number assignments declining in the months following financial assessment, there is no doubt volume has fallen.
But how much it has fallen is another question. And also: When will volume rebound?
Between the lag time between application and closing and a roughly two-month delay before loans are endorsed under the Federal Housing Administration, it has been difficult to note an immediate impact of the financial assessment on volume.
Anecdotally, lenders have reported mixed results. Some initially forecast volume would fall as much as 30% or more, while their estimates two months later came in a wide range. Counseling data released in July showed a 12% decline in sessions year over year.
And now, counseling data is showing an even smaller decline in sessions, at roughly 10% to 11% fewer sessions relative to the same time period last year, according to data gathered by Ibis Software Corp.
Industry analysts at Reverse Market Insight say recovery may already be under way, especially relative to other changes weathered by the reverse mortgage industry in past years.
“We’re seeing recovery in some of the early measures like cases issued and applications,” says John Lunde, RMI president, pointing to an uptick in case number assignments in June.
Source: Reverse Market Insight
And that recovery may take place over a shorter period of time than past volume recoveries relating to other changes implemented by the Department of Housing and Urban Development, namely utilization restrictions implemented in 2013.
“Based on everything we’re seeing thus far, I think it’s fair to say we’re seeing a much faster recovery from [financial assessment] implementation than from the initial utilization restrictions implementation back in September 2013,” Lunde says. “It will still take several months to get back to where we were in March (before the pre-FA surge in counseling sessions, applicants and cases issued), but the trend is positive.”
Written by Elizabeth Ecker