As Reverse Mortgage Volume Tightens, These Markets Are Letting Loose

As far as reverse mortgage volume is concerned in 2016, the industry is on track to see one of the lowest years for endorsements in recent history. Although constrained volumes have plagued many of the nation’s top-producing markets nationwide, other areas continue to demonstrate their resiliency to the widespread declines.

Home Equity Conversion Mortgage (HECM) endorsements totaled 3,534 loans in July, signaling the lowest month for volume this year, according to the latest industry data tracked by Reverse Market Insight. The month—echoing a recent low point of 3,256 units achieved in August 2014—did see endorsements increase in four regions on a monthly basis, however, only one of those regions reported volume growth year-to-date (YTD) through July.

That region: Rocky Mountain. Though the region’s 230 units in July outgrew its previous month tally by just a single loan, the area reports volume up 7.4% YTD in 2016.


Rocky Mountain continues to be carried by the production in its largest market, Denver, whose 1,038 units through July represent an increase of 25.5% compared to the same seven-month period last year. On a monthly basis, Denver added 138 units in July.

Also continuing to experience notable growth within the Rocky Mountain region is Fargo, N.D. Though Fargo is not the largest HECM producer within the region—adding just four HECMs in July—the market has grown its volume 25.9% YTD in 2016 compared to last year.

Much of the YTD endorsement growth is happening out west, with regions such as the Northwest and Pacific Coast states reporting volume that is 15.9% and 2.2% higher than their year-ago levels, respectively.

In the Northwest, the region’s largest HECM-producing markets, Seattle and Portland, Ore., continue to boost volume. In July, Seattle added 93 loans, while Portland grew its volume by 72 units. With July in the books, this brings the YTD volume for both markets up 21% and 26.6% compared to last year.

Down the coast, the nation’s largest HECM-producing region, the Pacific/Hawaii, also reported modest growth compared to last year. Through July, HECM endorsement volume in the region is up 2.2% YTD over last year.

Sacramento, Calif., and Reno, Nev., led the way with the largest YTD growth of 34% and 33.7%. On a monthly basis, Sacramento produced 85 units in July, while Reno upped its endorsement count by 25 units to bring itself to a total 164 loans through the first seven months of 2016.

The Pacific/Hawaii region also saw YTD increases through July from markets like Phoenix (10.2%), San Diego (6.9%), Fresno, Calif. (11.7%) and Honolulu (1.9%), while seeing declines of less than 5% from its largest markets, including Los Angeles (-4.2%), Santa Ana (-2.8%) and San Francisco (-0.4%).

As one of the largest HECM-producing states, California has historically performed well when it comes to volume, said Reverse Market President John Lunde, acknowledging that the state is home to many reverse mortgage lenders.

Through July, the Pacific/Hawaii region totals 7,940 loans this year. During this time period, the region reports a volume per lender ratio of 13.2, which is higher than any other region in the U.S. But while California and company can usually be counted on to produce the most HECM volume in the U.S., growth in regions like the Northwest and Rocky Mountain areas are reassuring.

“It’s always good to see new markets grow and pick up some of the slack, especially in years like this,” Lunde said.

Written by Jason Oliva

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  • As you read the article written by Jason one can see the Glass of Water is half full, which obviously means a light at the end of the tunnel!

    What I am about to say is nothing I have not said before. I feel a lot has happened in 2015 and 2016 to cause a lot of the down turn.

    We have had FA introduced in April of 2015, then in 2016, changes to the FA ruling, just the talk about it creates jitters!

    We have an election year, different than any other I have seen in my life time going on. We have a lot of turbulence and tragedy around the world as well as right here at home! This in itself is causing a great deal of stress and fear within everyone’s minds. Decision on things are being put off because of the fears lurking out there.

    People are not in a normal environment right now. Our industry offers many opportunities today that spell out growth and more growth. Things need to settle down, get the elections behind us, let us all digest the FA changes, let us get back on an even keel again, to some degree!

    Last but not least and I know I sound like a Parrott but we need to pound the pavement and go after the financial planners/advisors, attorneys, CPA’s, small banks and credit unions. Set your sights on the higher priced homes with plenty of equity.

    Those of you that use lead supplying companies, set your demographic requirements to target a different type clientele.

    Opportunity is out there and that half full Glass of Water will fill up more as time goes by, I am very confident of that!

    John A. Smaldone

    • John,

      Actually fiscal 2015 was an up year for the industry as to endorsements. As to endorsements, fiscal 2014 was worse than fiscal 2015 but not quite as bad as this fiscal year is turning out to be at least endorsement wise.

      It is not obvious the glass is half full. In fact this fiscal year will only have about 43% of the endorsements of fiscal 2009; if expectations hold up, the number of endorsements will be 14% worse than half number of endorsements for fiscal 2009, our best fiscal year for endorsements.

      Most anyone who is still in this industry believes that things will get better but the question is when. Starting at the beginning of fiscal 2011, we have been told over and over again, we will see 100,000 (or even 300,000) endorsements by a certain year only to be disappointed. It was not that long ago that we were being told that the Extreme Summit would cure our endorsement woes. While a lot of time and money were spent on this project, where is it today.

      What we do know about the current period is that proven marketing techniques have failed us. That optimism has failed and failed miserably as has pessimism. Yet the more that either fails, the more entrenched their adherents become.

      It is easy to be an optimist or a pessimist but it is hard to be a realist. The reason is that just that. To take a position a realist must actually reason. For an optimist, everything is going to work and for a pessimistic, everything is subject to failure. To a realist better information is always desired for better determination on how to proceed.

      • Cynic,

        I am not saying you are all wrong in what you say. I always respect your opinion and your knowledge.

        However, to me the Glass of Water is half full , only because of the opportunities that are available to us in the professional communities.

        I realize as you do, the FA ruling when it first went into effect created many mental breakdowns but it did add a tremendous amount of credibility to our product. This in itself opened up doors that were not readily available to us.

        The latest round of changes and proposed uncertainties no doubt is creating major problems. If the Federal Government (HUD-CFPB) would stay out of our lives and stop interfering in areas where they have little knowledge in, just maybe, everyone would benefit from it!

        I do appreciate your reply and your point of view. In the meantime, Make it a great Monday.

        Thanks Cynic,


      • Hey John,

        Hope you had a great weekend.

        If the cost of credibility is a 15% drop in new business, it is hard to believe that the reward was worth the cost. That is especially true since the subject of suitability has not been addressed. Financial assessment and the suitability of taking on debt to achieve a goal are two different topics.

        Yet April 27, 2015 is not the only time HUD addressed limiting the needs based senior in making significant changes to HECMs. On September 30, 2013, HUD did much more. It reduced PLFs, added the first year disbursements limitation (that currently is resulting in substantial portions of the line of credit to be ineligible for disbursement until the beginning of the second year after closing) and eliminated all Standards except fixed rate Standards which were previously eliminated on 3/31/2015.

        So if the changes of 2013 effectively reduced the most prone to strategically default, what did financial assessment achieve except some unquantifiable amount of credibility?

        What is discouraging is that HUD pulled together the rules for financial assessment without first measuring its success from the changes of 2013. It would seem combined, the changes of 2013 and financial assessment, have had a draconian impact on HECM endorsement volume.

        Without some research, suggesting amendments to the changes of 2013 or financial assessment would be like taking shots in a complete blackout. As of yet HUD has shown no desire to determine what needs to be tweaked. So for for now there is not much which can be done.

    • This is a niche market and it is a very small % of the 62+ population. There are only a certain # of folks who will actually get a reverse mortgage of those eligible no matter how they are preached to. Unfortunately, almost every program change this industry has made in the last 10+ years to ‘improve’ the program for HUD and the investors has only decreased the number of eligible folks and made the program less appealing in my opinion. I see future changes only continuing this trend. Why else would there be a surge in volume before every change? Because the program is getting worse for the borrower. There is nothing in the foreseeable future that I personally see will have a significant impact to improve #’s. This is my opinion, but I also get tired hearing that this industry is going to take off any day now. Maybe I’m wrong, but I do not see it.

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