Reverse Mortgage Endorsement Volume Dragged Down 7% in October

The impact of the Financial Assessment continues to rear its ugly head on Home Equity Conversion Mortgage (HECM) endorsements with volume now falling 7.3% in October to 4,332 loans, according to the latest industry data tracked by Reverse Market Insight (RMI).

October signals the second consecutive month of endorsement declines, following September’s monthly total of 4,671 loans, which was down 18.8% from August.

“The continued decline shows the impact of the Financial Assessment implementation earlier this year as the pre-implementation pipeline of loans has almost entirely worked its way through the endorsement process,” RMI stated in its most recent HECM Lenders report for October 2015.

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Even with October HECM endorsements falling lower than the previous month’s tally, six of the 10 regions tracked by RMI reported increases.

The Rocky Mountain region saw the largest increase in endorsements during October, rising 23.4% to 285 loans, whereas the Southwest came in second for growth, rising 11.2% to 456 loans during the month.

Meanwhile, each of the other regions reporting HECM endorsement increases—Mid-Atlantic, New York/New Jersey, New England and Great Plains—all experienced gains of at least 8% in October.

The Pacific/Hawaii and Southeast/Caribbean, the industry’s two largest regions for volume, however, both shrank during the month, falling 26.8% and 4.2%, respectively.

“Surprisingly, 6 of the 10 regions we track actually increased on the month, but it’s hard to see the industry grow when the top 2 regions shrank so much,” RMI stated. “Pacific/Hawaii endorsement volume alone has been cut in half in just the past two months.”

There was an inverse growth/decline pattern among the top-10 reverse mortgage lenders compared to the regional performance, with just four lenders reporting gains in October and six reporting decreases.

American Advisors Group continued to lead the way in terms of volume, with 1,092 loans recorded in October, down approximately 12% from 1,239 loans in September.

One Reverse Mortgage followed, with 317 endorsements, reflecting a 10% drop from the previous month’s total, and the lowest single-month total for the company in the last 12 trailing months from November 2014 to October 2015.

In terms of growth, Reverse Mortgage Funding saw the largest monthly increase, growing 12.6% from 175 loans in September to 197 in October.

To see how other lenders performed in October, view the RMI report.

Written by Jason Oliva

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  • Could California endorsements be the greatest victim of financial assessment? If that is true, the loss would be disproportionately greater than the mere loss in endorsement numbers. As so many have pointed out the average value of new HECM collateral in California is higher than most of the country. So the combination of a disproportionate loss in the largest chunk of endorsements anywhere in the US plus the higher average value of the related collateral could prove to be a double whammy for lender revenues.

    Based on poor Case Number Assignment totals for both July and August 2015 along with almost all of the pre April 27, 2015 inventory now being endorsed, declined, or withdrawn, further declines in endorsements are expected for both November and December, 2015.

    Based on one month of endorsement activity with about 10% impact from applications with case number assignment dated before April 27, it would seem that the percentage loss in total fiscal year endorsements this fiscal year in comparison to last could be as high as 17%. Yet it is far too early to predict with any degree of accuracy how much loss, if any, we will experience this fiscal year in comparison to last but the on thing that is clear is that this fiscal year is off to a rough start.

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