Reverse Mortgage Volume Stunted by Ongoing Wholesale Decline

Reverse mortgage volume may have ended 2015 with a slight endorsement bump in December, but the prelude to that is a downward spiral of production from the wholesale channel, according to recent industry data.

For the third month in a row, wholesale Home Equity Conversion Mortgage (HECM) endorsements declined, most recently dropping 18.3% to1,553 units in November, according to the latest data release from Reverse Market Insight (RMI). Although retail posted a 1.6% growth during the month, wholesale’s numbers ultimately weighed down industry volume overall as endorsements fell 7.1% to 4,020 units in November.

“The disparity is even greater when comparing the cumulative effect of the past three months,” comments RMI, noting wholesale is down 44.9% from August volume levels, while retail is down 15.8% over the same period.

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In all of 2015, the wholesale channel has only seen two months worth of increases, colored by a surging summer where wholesale endorsements rose 24% in June and 14.4% in August—prior to the fallout of the Financial Assessment’s impact on industry volume.

Despite the industrywide decline of about 7%, some lenders were able to buck the trend in November with some considerable gains, including Live Well Financial, which led the way for growth among the top-10 lenders, rising 54.2% to 293 units.

Live Well, which ranked seventh overall in November, ranks fifth in terms of wholesale. Over the past 12 months, the company has seen its wholesale volume more than double, rising 105.3% compared to the previous 12-month period.

Wholesale production represented approximately 69% of Live Well’s volume in the 12 months trailing November, according to the RMI data. Meanwhile, the company’s retail volume, which ranks eighth overall, represented just over 31% of its production.

One Reverse Mortgage also bucked the November decline, reporting 357 units during the month, an increase of 12.6%. With only a single wholesale unit recorded over the trailing 12 months, One Reverse relied mainly on its retail strength, which grew 8.7% over the last 12 months compared to the previous 12-month period from December 2013 through November 2014.

Other highlights for November included RMS/Security One, which grew 3.9% to 369 units during the month, and Reverse Mortgage Funding, which posted a modest 0.4% increase as the company grew its monthly volume by a single unit in November.

See where other lenders stacked up through November, according to the most recent Reverse Market Insight rankings.

Written by Jason Oliva

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  • The following statement is so odd that it looks like RMI is talking about the three months which end in December rather than November: “The disparity is even greater when comparing the cumulative effect of the past three months,” comments RMI, noting wholesale is down 44.9% from August volume levels, while retail is down 15.8% over the same period.” Without more exactitude on language related to time invites confusion.

    If you doubt the confusion, just look how Jason opens the article: “Reverse mortgage volume may have ended 2015 with a slight endorsement bump in December, but the prelude to that is a downward spiral of production from the wholesale channel, according to recent industry data.” Yet we do not have wholesale information for December from HUD so how can Jason say this? It is because those who report on our numbers lack the discipline in using precise time relationship language,.

    “Last month” is not November even though that is the last month HUD has supplied us with TPO data breakdowns. As of January 20, 2016, last month is still December.

    Even the heading for the Novem ber report is confusing. “HECM Originators (FHA & Non-FHA).” Why not call the linked report, ” Unconsolidated Endorsements by FHA Approved Lenders and TPOs,” and the other endorsement report, “Consolidated Endorsement Report by Originating FHA Approved Lenders Only.” We need to use technically correct language and let readers learn what is what so that this confusion or which report shows endorsements for TPOs and which does not.

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