Reverse Mortgage Volume Riding High Pre-Financial Assessment Fallout

Home Equity Conversion Mortgage (HECM) endorsement volumes in August continued to ride high on the pre-Financial Assessment rush from borrowers, which pushed industry volume to its highest level seen in more than two years, according to the latest data tracked by Reverse Market Insight (RMI).

The boost in endorsements, propelled by the number of borrowers applying for HECM case numbers ahead of the Financial Assessment April 27 deadline, translated into a 14.3% monthly increase in August to 5,750 loans—the highest level since the 5,756 loans reported in July 2013.

“We’ve been talking for the past 3 months now about borrowers with case numbers ahead of the Financial Assessment deadline bumping up the endorsement numbers and this is the highest level yet,” writes RMI in its analysis of the HECM Lenders August 2015 report.


RMI, however, estimates that the industry will have to wait at least one more month until the Financial Assessment begins to bring down HECM endorsement volumes.

In terms of where the endorsement growth was happening geographically in August, only three of the top-10 regions saw increases in their endorsement levels during the month, with the Pacific/Hawaii leading the way rising 93% to 2,090 loans. 

A similar growth rate occurred in the Northwest/Alaska, which grew 91.7% during the month to 395 loans. Meanwhile, the Great Plains region saw endorsement volumes climb 16.7%.

Seeing the biggest monthly decline, the Mid-Atlantic saw endorsement volume drop 24% in August to 457 loans after logging 601 in July.

As for the top-10 reverse mortgage lenders, the August growth story was felt by most, especially Liberty Home Equity Solutions, which posted a 54.1% increase for its highest volume since March 2014. The 570 loans from Liberty in August brings the company’s trailing 12-month endorsement total to 4,184 loans, taking the number four spot among the top-10 lenders. 

The company trails RMS/Security One in the top-10 rankings, whose 474 loans in August brought signaled a 21.9% monthly increase—also the company’s fourth monthly increase—bringing its 12-month trailing tally to 4,860 loans.

August’s numbers now bring the 12-month trailing industry total to 57,144 loans.

View the RMI data.

Written by Jason Oliva

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  • Five months ago we had the highest total case numbers assigned in 19 months and last month we had the highest endorsement count in over two years. This is a strong vindication of the four month lag rule which states that it takes the average HECM four months to go from case number assignment to endorsement.

    Using the four month lag rule it comes as no surprise that September 2015 would be the first month we would see any significant impact from the first full month of applications which underwent financial assessment (May 2015).

    Yet there was a growing belief that the lag time for the average HECM to go from case number assignment to endorsement had somehow been reduced to just three months. What we have seen this past month is that the lag time was clearly more than three months and far more likely to be four months.

    The impact of financial assessment may not be all that clear in September, however. That is because a significant number of applications, which received case number assignments in April 2015 (or before) and are now closed were not endorsed before September 1, 2015, are very likely to be endorsed in September. There is the expectation that the total endorsement count for September to be greater than 3,000 and perhaps even 4,000. It may not be until October or even November before the impact of financial assessment will be clearly displayed in monthly endorsement volume.

  • Very interesting statistics. The comment made by RMI was in my opinion on target, we will have to wait another month to see the full effect FA has on endorsements.
    The article was well written and the figures quoted were very helpful as far as I am concerned.

    John A. Smaldone

    • John,

      Is it that clear that next month will bring any clarity to the question of the impact of FA (financial assessment) on endorsements? The problem with September is that the lag rule accounts for the average HECM but not those HECMs which take longer than the average HECM to go from CNA (case number assignment) to endorsement. As with other months September will have a mixture of endorsements. Most may come from April and prior months, not May.

      It could be that endorsements from September could even exceed the CNA count from May. HUD does not provide data on that basis so without their help there is no way to ferret out that kind of information from a source that would be universally agreed to as reliable.

    • John,

      In this case I agree with The_Cynic. In rare situations like this, it always seems that stragglers (closed HECMs with case numbers assigned before the date a change is implemented) tend to distort the impact of a change on endorsements for about five to six months.

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