Reverse Mortgage Endorsements Crash Following Pre-FA Volume Ride

Home Equity Conversion Mortgage (HECM) endorsements dropped 18.8% to 4,671 loans in September, signaling the end of a three-month run of high volume inflated by the pre-Financial Assessment rush, according to the latest industry data tracked by Reverse Market Insight (RMI).

“Those rules went into effect all the way back in April for new case numbers issued, but given the lag times associated with funding and endorsing loans after case number issuance we’re just  seeing the impact now,” RMI wrote in its analysis of the September data.

The nearly 19% decline was widespread, felt by nine of the top-10 regions tracked by RMI. The Rocky Mountain region was the only exception to the trend, though its HECM endorsements in September remained the same as August’s at 231 loans.


Falling the hardest in September were the Northwest/Alaska and Pacific/Hawaii regions, which saw their HECM endorsements drop 38.5% to 243 loans and 31.7% to 1,427 loans, respectively.

Meanwhile, the Southeast/Caribbean experienced the smallest decline in volume, with endorsements falling 3.2% in September to 902, from 932 loans in August.

HECM endorsement performance in terms of bucking the decline trend fared only slightly better among the top-10 reverse mortgage lenders, just two of which posted volume gains in September.

American Advisors Group (AAG) and Home Point Financial Corporation were the only two lenders that saw volume increase during the month, rising 1.6% and 38.6%, respectively.

View the RMI report.

Written by Jason Oliva

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  • True effects of FA are starting to be realized. Endorsements down 19%. The real question is how many loans have been passed on by originators? If there are late payments or income doesn’t fit the bill is resulting in loss of business that would have been funded loans. Is that an additional 25% added to the 19% or more? Most homeowners who need a reverse mortgage have some type of difficulty and NOW having a difficulty such as slow pays or low income will negate a reverse mortgage.
    Seems we need to continue to market to a more savvy consumer who has a tough time wrapping their head around costs and ongoing insurance. Ouch..
    My take is the weak will be weeded out, comp plans will be changed at lenders who pay their employees, some lenders will fold. There is no stopping this and as the months roll by I’d imagine that 19% will grow to 25%.
    We need lending limits to be raised and now is as good as a time as ever.

    • reverseguru1,

      You could be right but you seem a little early in declaring the downturn can be laid at the feet of financial assessment. A loss of 25% of what we saw in July 2015 would be a blessing. Right now the loss for the next quarter will be closer to one-third of the endorsement production we have seen for the calendar quarter ended last week.

      • If it’s not financial assessment what do u think the problem is? The timing of all of this only points to FA…?

      • reverseguru1,

        Endorsement losses in October 2015 and beyond will be from Financial Assessment. The loss in September should have been much larger if the majority of endorsements were coming from applications that had undergone financial assessment.

        The loss in September was in part from 22 workdays in July and 21 workdays in August helping to get through a large portion of the closed HECMs originated during the high volume months of March and April despite the slowdown in processing, underwriting, closing, and endorsing caused by unfamiliarity with financial assessment.

        But after September, low volume will principally come from applications undergoing financial assessment.

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