Reverse Mortgage Volume is Tanking, But These Markets Are Staying Afloat

As the saying goes: April showers bring May Flowers. But with reverse mortgage volume dipping to one of its lowest monthly totals in recent memory last month, May was anything but rosy for endorsements—at least for some markets across the country.

Dragged down by a unanimous decline across all regions, endorsements of Home Equity Conversion Mortgages fell 14.1% in May to 3,646 loans—the lowest single-month total since August 2014, according to the most recent industry data tracked by Reverse Market Insight.

Compared to all other regions, the Great Plains saw the biggest monthly decrease in volume, dropping 37.2% in May to just 71 loans. Through the first five months of 2016, the region totals 479 units, which is 11.6% less than its year-ago total of 541 loans.


On a year-to-date basis, St. Louis was the only market within the Great Plains region to report endorsement growth. At 114 loans through the first five months of the year, volume in St. Louis is up 5.6% compared to its year-ago total of 108 loans.

The Rocky Mountain region saw the largest year-to-date increase in reverse mortgage volume compared to last year, with 1,333 total units through May, an increase of 23.9% compared to the same period in 2015.

Bolstered by year-to-date growth in nearly all of its participating markets, the Rocky Mountain area was led by its largest metro Denver, whose 765 units through May represents a 45.4% increase from its year-ago total. Fargo, N.D., also experienced significant growth with a total of 25 loans year-to-date, a growth of 56.3% from its 2015 level.

The Northwest/Alaska once again entered the ranks among the growing regions for endorsement volume. Through May, the region reported 1,178 loans, up 22.7% from the comparable period in 2015. The region’s largest markets, Seattle and Portland, Ore., continued to lead the way with 507 and 423 loans, respectively, representing YTD growth of 30% and 32.6%.

As for the industry’s largest producer by volume, the Pacific/Hawaii, reports 4,821 total units through May, putting its year-to-date total 7.2% higher than where it was at this time last year.

Only two markets, Las Vegas and Tucson, reported YTD declines—13.4% and 15.7%, respectively—but it was several of the middle market cities that helped propel the region’s growth.

Reno continued its YTD growth for another month. At 125 loans, The Biggest Little City in the World is is currently reporting volume 43.7% higher than its year-ago total of just 87 loans through the first five months of 2015. Through April, Reno’s endorsement volume was up 52.1% on a YTD basis.

Joining Reno in bolstering the Pacific/Hawaii region was Sacramento, which reported 585 loans through May, an increase of 38.3% from last year; and Fresno, Calif., whose 266 loans represents an increase of 22.6% from 2015.

See where other markets stack up through May.

Written by Jason Oliva

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  • I know volumes are down and there are many reasons for negativity at this point in time.

    I have been thinking why is this happening? I came up with some thoughts about it, which i am about to share with you.

    One main reason is the entrance into the market place with the FA ruling. We lost about 30% of the market we do not have any more! The other reason, discouragement on the part of LO’s and personnel as a whole. Discouraged with coping with FA and its different method of doing business than many in the reverse mortgage space are not used to! Last reason, new proposed changes, we don’t even get a handle on one and now we may have to look at another barrage of uncertainties!

    These are enough to drag business down as well as enthusiasm, right?

    Well, lets look at the 30% of the market we have lost since April of 2015, what have we done to make up for it? How many new markets have we penetrated successfully? How much time have we all taken to thoroughly understand FA? How much time have we taken to study up and learn about the financial planer and adviser industry? How much time have we learned about what truly motivates the small community banker and credit union in order for us to be able to do business with them?

    Last question, how many small banks, credit unions, financial planers, attorneys and accountants have we called on? This is the only way we are going to offset that 30% loss we have experienced!

    Have we gone out targeted the higher value home with lower LTV’s. Lead companies may be needed again to help us target those new markets?

    As far as FA, it is here to stay, embrace it enthusiastically! Those that have not realized FA has put a + credibility rating on our product better start realizing it quickly, this is everyone’s saving grace. This is the Red Carpet trail to plenty of new business. This also puts all of us into a different class of professionalism!

    Educating ourselves is more critical than ever in this ever changing environment we are in today. Companies need to realize more emphases needs to be placed on educating their LO’s, processors and all who deal with the senior and clients. We have no choice, other than to learn as much as we can about the mindset of the financial planer, small community banks, credit unions, accountants and other professionals in the financial world. If we don’t, we are not going to make it, pure and simple!

    That is my take on it for what it is worth my friends!

    John A. Smaldone

    • John,

      There is absolutely NO indication that we have seen 30% or more of our actual business lost due solely to financial assessment. That view is far too negative. Our traditional market was sliced and diced far more by the changes that took place on April 1, 2013 (no more fixed rate Standards) and on September 30, 2013 (no more adjustable rate Standards and other changes) than due to any HUD implemented changes since September 30, 2013. Fiscal 2014 suffered as a result of the changes that took place in the prior fiscal year with the lowest fiscal year endorsement total for any fiscal year from fiscal year 2005 to fiscal year 2015. As previously stated May 2016 is the eleventh consecutive month in which the total endorsements for the trailing 12 months was greater for the current year than the corresponding month in the year before. (There is a reason for this result in the last 8 months but that will be discussed at a future date.) For example, the total endorsements for the 12 months ended May 31, 2016 were greater than for the 12 months ended May 31, 2015.

      While we have suffered a loss in ongoing business due to financial assessment, there is no clear indication what that amount is from endorsement figures alone. In fact that number is generally obscured due to replacements coming from referrals by financial and retirement income advisors. What we do know is that our total unpaid balances due at origination have fallen since March 31, 2013, in particular. This is generally true since the clients of these referral sources have less immediate need of the entire proceeds available to them (as measured by mandatory obligations) and adjustable rate products have generally been more appealing to borrowers.

      Community banks and credit unions may have contributed to the replacement base but it is doubtful that they have contributed all that much. This is especially true since no major banks offer HECMs; thus these entities are not losing business to the large banks by not offering HECMs (or not working with originators to provide them).

      Education of our current origination core will improve endorsements marginally over time but to gain real progress in referral sources from financial advisors and retirement income advisors we need a recruiting emphasis on gaining new originators from those groups or individuals with similar experience in similar fields if we really want to farm and mine their full potential.

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