February Reverse Mortgage Volume Rebounds 17%—More Growth on the Way?

After a sluggish start to 2016, where reverse mortgage endorsements began the new year at an 8% lag behind the previous month, February’s numbers may be an indication that future growth is on the way.

Home Equity Conversion Mortgage (HECM) endorsements grew 17.7% in February to 4,579 loans, putting January’s disappointing results in the rear view mirror, according to the latest industry data tracked by Reverse Market Insight (RMI).

February marks the highest single-month of HECM endorsement since 4,671 units in September 2015, which on the reverse mortgage roller coaster, began the descent of plummeting volume following the June-through-August highs inflated by the Financial Assessment.

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“Endorsements have been lumpier than usual, but we’ve seen good signs in recent application volumes and counseling sessions pointing to further recovery growth ahead,” RMI President John Lunde told RMD. “Unfortunately, we’re still at pretty low levels, but at least the industry is on its way back up the growth curve after the Financial Assessment.”

February’s growth was nearly an all-out effort among the top-10 regions tracked by RMI, with all areas reporting endorsement gains during the month, except for the Mid-Atlantic, which saw volume fall 9.7% to 290 units.

As always, the Pacific/Hawaii region led the way with the highest unit count at 1,321 loans in February. But pulling out the biggest growth during the month was the Northwest/Alaska region, which reported a 46.8% increase from January’s 190 loans to 279 in February.

The Southwest also had a good showing, seeing its reverse mortgage volume rise 35% to 567 loans. Rounding out the top-three regions for growth was the Rocky Mountain territory, which produced 315 units in February, an increase of 30.7% from its previous month’s total.

February’s growth pattern was similar amongst the industry’s top-10 lenders, the vast majority of which reported increases during the month.

After several months of depressed volume, Liberty Home Equity Solutions continued its growth streak with 490 loans in February, a 68.4% gain from January’s 291 units, which was 273% higher than December’s total of 78 units.

Reverse Mortgage Funding also had a good February, reporting 190 loans, a growth of 16.5% from the previous month. In terms of growth, RMF was followed closely by One Reverse Mortgage, which saw its HECM endorsements rise 15% to 330 loans—second-highest overall in terms of unit count.

Meanwhile, Home Point Financial Corporation and Live Well Financial, Inc. reported lower endorsement counts in February compared to the previous month, each seeing its volume dip 20% and 13.3%, respectively.

View the latest RMI report to see where other reverse mortgage lenders ranked in February.

Written by Jason Oliva

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  • While I am a fan of what RMI does, I am not sure on what basis John states that “we’ve seen good signs in recent application volumes and counseling sessions pointing to further recovery growth ahead.”

    Where the signs of alleged recovery are coming from seems to be unverified data from counselors and lenders. In an August 19th 2015 RMD article titled, “Reverse Mortgage Volume Trends Positive Following Financial Assessment Decline,” John stated: “‘We’re seeing recovery in some of the early measures like cases issued and applications..'” That article is posted at
    http://reversemortgagedaily.com/2015/08/19/reverse-mortgage-volume-trends-up-following-financial-assessment-decline/ . What we did not have in between these two quotations was endorsement recovery.

    We all know that endorsements come from applications that get case number assignments. Based on the four month lag rule of thumb for endorsements, the endorsements for this month and next will principally come from the applications which received their case numbers in November and December of last year. We already know that the totals for case numbers assigned in those months are 10% and 15% respectively lower than the total for October from which we saw most of the endorsements for last month. Thus the expectation is we will see endorsements of about 4,100 and 3,900 for this month and next.

    In fact recovery can not be found in any numbers provided by HUD. If the conversion rate for last month holds over the next two months, we will see the worst seven month start for any fiscal year in this decade. The same is true for the first four months of this calendar year.

    Yes, lenders want things to look better than they are. What seems to be true is that we are hitting bottom on just how bad financial assessment has been on not only on a stat basis but more importantly also on the net income of lenders throughout the industry.

    Looking at the financial information for one lender who must report its net income to the SEC, we can see the losses being incurred. Just look at the recent RMD article on Walter, the parent of RMS and Security One. They have not seen net income from their reverse mortgage operations since acquiring either RMS or Security One; the Walter losses have been enormous.

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