Reverse Mortgage Volume Trends Downward as Some Markets Ride High

Reverse mortgage volume is lagging behind its year-ago levels, and that’s no secret. But while the greater industry feels the strain of sluggish endorsement production, certain markets are brimming with activity, recent industry data indicates.

Through the first half of 2016, endorsements of Home Equity Conversion Mortgages (HECMs) through totaled 24,634 units, a decrease of 13.1% compared to the same year-ago period in 2015, according to most recent analysis from Reverse Market Insight.

At the midpoint, it appears as though 2016 is on track to be be one of the lowest volume years the industry has seen in the last decade. And with July’s numbers coming in at 3,534 units, the volume trend line is primed for an ever further dip below recent comparable years. Screen Shot 2016-08-25 at 11.48.32 AM


(Source: Reverse Market Insight)

More than half of the top-10 states tracked by RMI report year-to-date declines in endorsement volume through June, with New York posting the greatest year-over-year decline of 36% compared to the first half of 2015. In terms of unit count, New York ranked fourth among all states with 1,109 loans.

Other top-producing states, such as Pennsylvania and New Jersey, reported big drop-offs of 35.2% and 32.2%, respectively, in their endorsement volume through June.

Meanwhile, California, which continues to rank first among all states in terms of unit count with 5,552 loans YTD through June, reported a growth of 4.4% compared to its year-ago endorsement production.

But the state seeing the biggest boost in production was Colorado, whose 900 loans throughout the first half of 2016 represents an increase of 27.3% compared to last year.

The hefty gain is due in large part to Colorado’s largest city, Denver, which ranked second among the top-10 city’s for endorsement volume. Through June, Denver reported 208 loans, a 65.1% growth compared to its year-ago volume. The Mile High City came in 61 loans short of Los Angeles and just three loans over Houston, which reported 0.5% growth in its YTD volume through June.

The City of Austin, Texas, also deserves honorable mention as it “busted” into the top-10 city rankings with 129 loans during the first six months of 2016, representing an increase of 34.4% compared to the same period last year.

In total, the top-10 cities accounted for 1,724 loans YTD through June, a decline of 9.2% compared to last year. The decrease is understandable, considering that six cities reported lower endorsement volume compared to their year-ago production.

View the RMI report to see where other reverse mortgage markets stacked up during the first half of 2016.

Written by Jason Oliva

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  • This article should be cut and pinned up in every originator’s office in the country. We need to remember not only our good days but our tough days as well. Several of us believe that the bottom may be near. The climb has started with a better case number assignment total for June over May and a 12.9% increase over June 2015.

    California still carries more than its fair share of the load. Congratulations to the Texas and Colorado capitol cities. It will be great when more of the country can join in.

  • There is no question that year to date totals are on a downward trend but to have a trend, there must be at least two consecutive amounts headed in the same direction from a starting point; thus three points are required at a minimum. In this case it is

    Yet as of July 2016, there is no trend for monthly HECM volume. The same holds for May. This calendar there has only been one trend established. In February, March, and May is the only the three consecutive period where the last two months of that period are more or less than the month before it. So the only trend seen so far in 2016 is downward.

    Total endorsements for the first half of calendar year 2016 is the lowest such total since calendar year 2005. Based on 1) Case Number Assignments for June and July 2016, 2) the current modified annualized conversion rate, and 3) total endorsements for the calendar year 2016 through July 31, 2016, the projected endorsements through the first nine months of calendar year 2016 are projected to be about 36,525 endorsements which will be the lowest such total since calendar year 2005.

    As to the remainder of 2016, there is insufficient information to determine what the last quarter of calendar year 2016 or any month in that quarter will look like other than October 2016 which looks like it will be about 4,300 endorsement range which will be about the same as the endorsement total for October 2015. Again this will be the lowest such year to date total since calendar 2005.

    The prediction for October 2016 endorsements would be about the same start for fiscal year 2017 as fiscal year 2016. So for now we have no reliable source that indicates how fiscal year 2017 and calendar year 2017 will turn out to be regarding total endorsements.

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