Reverse Mortgage Volume Tumbles to New 2016 Low in July

After a slight hiccup that saw a modest gain in June reverse mortgage volume, Home Equity Conversion Mortgage (HECM) endorsements plummeted once again to their lowest level seen this year.

HECM endorsements fell 6.3% in July to 3,534 loans, marking the lowest single-month tally for 2016, according to the most recent industry data tracked by Reverse Market Insight.

Earlier in the year, May took the cake for having the lowest endorsement count in 2016 with 3,646 loans. At the time, May volume echoed the 2014 low point of 3,256 units reported in August of that year, but now it appears that July 2016 has taken those honors.


Declines during the month were spread nationwide, with just four regions tracked by RMI reporting increases—none of which ranked among the top-4 largest regions by volume.

Instead, it was the largest regions that lost the most steam in July, with the Pacific/Hawaii falling 7.8%; the Southeast/Caribbean dropping 10.9%; the Southwest declining 14.2%; and the Midwest slumping 11.2%.

New England saw the biggest rebound among all regions with 128 loans during the month, reflecting a monthly increase of 28% from June. The region, however, ranks ninth overall and was only one of two regions to report less than 200 units in July.

Aside from the Southeast, regions on the east coast experienced upticks in their monthly HECM production last month.

New York/New Jersey reported 265 units in July, an increase of 5.6% from the previous month, and the Mid-Atlantic posted 289 units, representing a growth of 3.2%.

Among the top-10 industry lenders, growth was more sparse with just three companies reporting volume increases in July.

Finance of America Reverse led the way for July growth with 298 units, an increase of 7.2% from the previous month. The company ranks second overall in terms of total HECM endorsements over the past 12 months with 3,913 loans.

After reporting just 71 loans in June, Reverse Mortgage Solutions/Security One Lending increased its production 22.5% to 87 total endorsements in July. This marks the company’s highest single-month volume since April, when RMS/S1L reported 162 units. Despite not eclipsing 100 units in the last three months, RMS/S1L currently ranks fifth among the top-10 industry lenders in terms of total volume over the last 12 months.

Lastly, Reverse Mortgage Funding was the remaining lender among the top-10 to report an increase in endorsements for July. The company produced 264 units during the month, representing an increase of 38.9% from June.

With July’s numbers in the books, this brings total reverse mortgage industry volume to 28,198 units through the first seven months of 2016.

To view where other lenders stacked up in July, as well as which local markets are reporting the highest volume growth year-to-date in 2016, view the RMI data.

Written by Jason Oliva

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  • By not hitting 34,000 endorsements so far this calendar year, there is room to wonder if total endorsements for calendar year 2016 will not only be less than last year’s calendar year total of 56,437 endorsements but even worse, by coming in at just 28,198, one wonders if total endorsements for calendar year 2016 will be less than 50,000 total endorsements?

    There is far less room to wonder how fiscal 2016 will come out. After 10 months fiscal year count just reached 40,000 (actual count was 40,777). This means that to even reach 50,000 endorsements this fiscal year, the industry will need to produce over 9,222 endorsements in this and next month’s endorsement activity, an amount seemingly not achievable based on case numbers assigned during April and May 2016.

    The endorsement count for July was not only worse than June’s count but it was 29.7% worse than the same count for July 2015. To date, neither referrals from financial advisers and Realtors nor the strong growth of the senior population from Baby Boomers for the last eight and 1/2 years have resulted in any material increase in industry total HECM endorsements.

  • I don’t feel that disqus_nWIsNzhoKh (That one was hard to type out) is that far off!

    The recent changes to the FA ruling, has everyone spinning in their chairs. I don’t know what happened to all the comments made on the proposed changes to FA but if I am understanding it right, some of the changes are now or going into effect shortly. I stand to be corrected on this.

    Never the less, the changes and up coming changes has the industry in a confused state, including those originating the product!

    We have no choice but to get beyond this, we have to many positive statistics showing us we should be increasing endorsements month by month, NOT declining!

    Those that continue to mess with regulations have to know what they are doing to our program and how it is effecting seniors of today. If anyone on these committees are reading what I am saying, take account of your actions, start having some passion for our seniors and our country!!!!!

    John A. Smaldone

    • John,

      Just wait. HUD will issue a final regulation incorporating the changes it deems necessary. However, if those responsible for the proposal did not believe that the changes were needed, they never would have proposed them.

      The only thing that financial assessment was supposed to accomplish was a substantial drop in the 10%-12% default rate of a few years ago. Yet was financial assessment needed to accomplish that goal? First FHA regulators never looked at the ACTUAL effect of the PLF or first year disbursements limitation changes which took effect on 9/30/2013 (nor on the further PLF adjustments which went into effect on 8/4/2014) on the default rate on payment of taxes and insurance before adopting financial assessment on 4/27/2015. Nor did they take into consideration the current and short-term economic environment Other than the cries of lenders to add financial assessment, why was it NEEDED? Second, they did not take into account the change in the financial and economic outlook as to their impact on property charge defaults.

      In practice financial assessment has proven to be nothing but overkill!!

      What is the most reduction to property charge defaults that HUD could expect from financial assessment alone, a 30%, 50%, or 70% reduction to defaults from HECMs with case numbers assigned after April 26, 2015? If the endorsement reduction for fiscal 2016 is 15%, does that represent a 15% reduction to business or 20% or more? One would have expected some increase in endorsements if financial assessment had not gone into effect.

      Let us say that the changes on 9/30/2013 and the improved economic environment will reduce targeted property charge defaults by half. Financial assessment could only reduce those defaults to 1.8% at the most on HECMs with case numbers assigned after 4/26/2015. Yet the cost to our business could be as high as 20%. So if financial assessment reduced property charge defaults from 6% to 1.8% (which is very doubtful), then the price has been 20% of our business.

      There is a reason lenders do not want to hear any negative reactions to financial assessment and that is because they insisted it go into place over even FHA questioning as to its need. Our experience in fiscal 2016 has been a disaster and all to cure a default rate that NO ONE knows what it will be on HECMs with case numbers assigned after 9/29/2013 but before 4/27/2015.

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