As Reverse Mortgage Volume Fades, These Cities Shine Bright

Apart from a slight uptick from January to February, reverse mortgage volume has been on the decline for most of 2016. But as industrywide volume sinks further from year-ago levels, as always, there are some markets that buck the falling trend line.

Home Equity Conversion Mortgage (HECM) endorsements totaled 20,871 units through May 2016, representing a 9.4% decrease compared to May 2015, when volume totaled 23,048 loans, according to the latest data report from Reverse Market Insight (RMI).

Although volume improved slightly in June, 2016 endorsements remain well-below both last year’s totals and those of 2014. As a result, just four of the top-1o states tracked by RMI reported volume growth year-to-date (YTD) through May 2016. Screen Shot 2016-07-20 at 3.10.39 PM

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(Source: Reverse Market Insight)

California, forever the largest producer of HECM volume, led the way with 4,702 units YTD as of May, signaling an increase of 8.1% from this time last year.

The largest percentage growth belonged to Colorado, which at 45.7%, reported 765 total units to claim the fifth-ranked spot overall; ahead of Arizona, whose 748 units represent a modest increase of 1.6% from last year. Meanwhile, Washington rounded-out the top states reporting growth, with 577 total units in May YTD, an increase of 24.1% from the previous year.

Denver gave a considerable boost to Colorado’s overall endorsement volume. The city accounted for 154 total units through May 2016, reflecting a 53.9% growth over last year.

The top spot among cities was Southern California-owned, by ways of Los Angeles and San Diego, which reported 232 and 174 units, representing gains of 2.2% and 16.8%, respectively.

To see where other states, cities and counties stacked up through May 2016, view the RMI data.

Written by Jason Oliva

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  • A lot going on this year, the elections, the heat wave, tornadoes, fires, storms everywhere, the elections, police killings, terrorist attacks and more !

    I am not saying this is the major cause for the slowdown but it is not helping the situation any!

    We also have to look at the change in our industries structure over the past couple of years with all the changes that have occurred and maybe more to come! All of what I just mentioned are interfering with business as normal

    However, we also have to look at and ask ourselves, are we truly going after the new business opportunities we have available to us. We may have lost 25 or 30% of the market because of FA but we also picked up new founded creditability toward our product. We also have had more positive publicity that I can remember!

    All of this is powerful ammunition to take advantage of. We have to develop new professional partners to work with in order to replace the business we have lost due to FA.

    We have a lot to be positive about and if we follow the right path, business can return to us much stronger than it ever has!

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

    • John,

      In the last six years there has been a lot of misreading of market trends. Some claimed that we would quickly return to 100,000 endorsements each fiscal year. Even recently one was claiming that with the strength of the Extreme Summit we could reach 300,000 endorsements in a fiscal year by 2018. Even this fiscal year we have had cries that there were signs of recovery.

      All of the foregoing predictions have proven not just false but unrealistic. What are we expecting the endorsements for fiscal 2016 to be? About a 12% to 16% loss in endorsements when compared to endorsements for fiscal 2016.

      At least one industry leader was predicting a 5% increase for this fiscal year when it started but most industry leaders were estimating a loss of 5%. The head of AAG just about got it right. Many originators were talking about losses of between 25% and 50% but most were looking for a loss in endorsements of between 10% and 20%.

      In the eight and one-half years in which Baby Boomers have been turning 62, we have seen no significant increase in the number of endorsements; in fact the overall picture are overall downturns with substantial losses in annual endorsement numbers. In fact there is only the slightest possibility that the number of endorsements for this fiscal year will even be half of what they were during the first fiscal year that Baby Boomers first began turning 62 (fiscal 2008).

      While I am positive about our future, I am not optimistic. In other words if events dictate certain losses in endorsements in the near term, my positivity will not allow my thinking to override that new condition and reach such irrational conclusions as 100,000 or 300,000 endorsements per fiscal year before the end of this decade. Are there any positive conditions that could give us fantastic endorsement numbers of better than 100,000 by the end of the decade? Most likely not.

      For those who might not be aware, in each annual actuarial report the actuaries predict endorsements for the following few years. While their projections are generally conservative when compared to projections by our industry optimists, they generally are too high.

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