Retail Volume Slumps, Hits Brakes on Reverse Mortgage Momentum

Reverse mortgage volume didn’t so much kick-off 2016 as it sluggishly rolled into the new year with some disappointing numbers, particularly from the retail origination side, according to recent industry data.

Overall Home Equity Conversion Mortgage (HECM) endorsements fell 8% in January 2016 from the previous month—a decline propelled by a 12.9% plummet in retail endorsement growth, as noted in the latest data release from Reverse Market Insight.

At 2,199 units, the retail channel comprised roughly 57% of January’s volume, with 1,690 wholesale units picking up the remainder. During the month, wholesale production fell 0.9% from 1,705 units in December.

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The nearly 13% decline in the retail segment follows two months of increases in both November and December, when HECM endorsement volumes totaled 2,467 and 2,545 units, respectively. January’s retail total of 2,199 units—as well as the month’s total of 3,889 units—was the lowest single-month endorsement count in the past year.

But while retail production hit a snag to start off the year, some lenders reported substantial growth in January over the trailing 12 months.

For instance, Reverse Mortgage Funding posted 218 units in January, which was 20% lower than the company’s previous month tally, however, RMF saw a whopping 296.1% growth in its retail segment over the previous 12-month period, driven by the addition of 983 retail units. Meanwhile, RMF reported a 28.4% increase in wholesale units during this same period.

Live Well Financial also reported sizable retail growth in January. Over the past year, the company added 685 units to its retail channel, an increase of 222%, effectively ranking the company second behind RMF in terms of retail unit growth. Live Well also grew its wholesale volume by 807 units, an increase of 66.3% from the previous 12-month period of February 2014 – January 2015.

Among the top-10 lenders experiencing the biggest impact of January’s retail decline were Proficio Mortgage Ventures, Liberty Home Equity Solutions and Cherry Creek Mortgage Company, which each reported retail declines of -37.7%, -23.8% and -21%, respectively, in January 2016 compared to the previous 12-month period a year ago.

View the RMI data to see where other lenders ranked for retail and wholesale volume though January 2016.

Written by Jason Oliva

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  • I look at this slump as temporary, a lot going on right now and going back to the first of the year, tax season, Presidential primary’s going on, political debates and you name it. Just a lot of activities happening this year and seniors are involved in many of these things.

    I would not look at it a negative but look at as a delayed success beyond our control. To much going for the reverse mortgage space not to be successful in 2016!

    John A. Smaldone
    http://www.hanover-financial.com

  • In fiscal 2009 we saw endorsements of over 114,000. With two exceptions (last fiscal year and fiscal 2013 but both of those years had less than 60,000 endorsements) we have seen an overall endorsement decline.

    Many want to see this as a temporary decline. Last August one very talented HECM analyst cried out that there are signs of recovery. Yet where was that recovery? Earlier this month he did the same.

    Look all of us would like to find that fiscal 2017 will have 120,000 endorsements but realistically how is that going to happen? One of the leading sales optimists in our industry a few years back told us that the Extreme Summit would usher in a recovery like we have never seen and he believed it could be a path to 300,000 endorsements in fiscal 2018.

    News flash — we will not see 300,000 endorsements in fiscal 2018 but not for a lack of trying or believing it is possible. But our slump is not due to tax season (it happens every year), a Presidential election (so was 2008), or other distractions. It is more systemic than that. While most see growth in our future it will not come from a swell as in the past but hopefully steady growth over time. Most of us hope fiscal 2016 is the bottom of our endorsement decline.

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