Reverse Mortgage Volume Ends 2015 on Positive Note

After three months of declines, Home Equity Conversion Mortgage (HECM) endorsements ended 2015 on a positive note, rising 5.2% in December to 4,233 loans, according to the most recent industry data tracked by Reverse Market Insight.

With December’s production, that brings total reverse mortgage industry endorsement volume to 56,437 units in 2015, a 6.6% increase compared to the 2014’s full-year total of 52,949 units, though down 7.4% from 2013, when the industry last cracked 60,000 units in a single year.

While the December increase is encouraging, given the string of declining volume experienced from September-November, RMI notes fundings have been “mostly flat” for the past three months based on data from lenders participating in its industry data repository.

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“[S]o it’s hard to imagine any significant endorsement uptrend in the immediate future,” writes RMI.

As for December, six of the top-10 regions tracked by RMI reported volume gains during the month, the largest being Northwest/Alaska, which grew 32.2% to 230 loans. This brings the region’s full-year 2015 total to 2,605 units, ranking eighth overall.

Following closely in terms of growth was New England, which reported 164 loans in December, a 28.1% increase from the previous month; and the Pacific Hawaii, which led the way in terms of sheer volume with 1,135 units in December, up 24.6% from the previous month.

The Rocky Mountain region saw the biggest decline in December, with endorsements falling 18.7% to 226 units. Year-to-date, the region totaled 2,919 HECM endorsements.

Similar to the regional performance, six of the nation’s top-10 lenders also reported volume gains for the month.

Home Point Financial, which ranked eighth overall, had the biggest growth story in December. The company’s 99 loans during the month represented an increase of 39.4% from the previous month, bringing its full-year 2015 total to 1,239 units.

RMS, which ranked third overall, also saw a big bump in volume during the month, with endorsements rising 29.1% to 413 loans. Year-to-date, the company stands at 4,552 total units.

Some of the largest volume growth occurred beyond the top-10 industry lenders, particularly among The Federal Savings Bank (#21), whose 2015 year-to-date volume of 411 units is 172% higher than the 151 loans it reported for the comparable period in the prior year.

Following closely behind The Federal Savings Bank, The Money Store grew its year-to-date 2015 loan count 179% to 329 units.

Meanwhile, Fairway Independent Mortgage Corporation, which ranked 34th overall, reported a 327% increase in 2015 with 158 loans, compared to just 37 in 2014.

But while December provided a much-needed volume boost for many in the trailing aftermath of the Financial Assessment’s drag on endorsements, at the same time there has been a persistent decrease in the number of active lenders endorsing HECMs since August, when there were just under 300 lenders. In December, that number has dropped to 200.

“We haven’t heard much chatter about lenders getting out of reverse due to Financial Assessment, but the timing puts that as the most likely issue,” writes Reverse Market Insight. “The numbers show there are fewer lenders endorsing loans each month, and if it keeps going, we’d be well outside recent experience on this stat within a few months.”

View the RMI report.

Written by Jason Oliva

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  • It would be hard to trust predictions based on incomplete, biased, and unverified data. Although there is value in the data in the repository, it is not a base from which one can determine outcomes with a high degree of confidence. At best it is a weaker source than the data provided by HUD.

    It is hard to believe that Case Number Assignments (complete, far less biased, and provided by an independent third party) are not a better and stronger predictor of endorsements over the next two months. During the five months beginning June 1, 2015 and ending October 31, 2015, each month had over 6,000 HECM Case Numbers (CNs) assigned and for October the total was over 7,000. Each month was greater than the prior month except August.

    With a base of slightly over 6,000 for August, the CNs assigned for September and October show a glimmer of early recovery. January 2016 endorsements may be low due to the holidays and vacations but expect total endorsements for both months to be in the low to mid 8,000 range for an average in the low 4,000 range per month.

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