By James Veale, CPA, MBT
Most sales managers, originators, and other participants in the Home Equity Conversion Mortgage industry are longing for significant validation that the sales efforts of this decade have had any meaningful results. Annual sales trends, from stagnation to horrific losses and then back to five years of what seems like neverending stagnation, have not brought confidence to our sales teams. For many, it has been all too discouraging.
While annual trends are extremely important, they are not the only way sales should be measured or analyzed. Aggregate endorsements over the last 10 years are on pace to be about 204.32%* more than what they were as of the start of business on October 1, 2007, when they totaled about 346,177. By September 30, 2017, that total should be about 1,053,500, an increase of 707,323 (or 204.32%) new endorsements in this decade.
During the prior decade that ended on September 30, 2007, the aggregate HECM total went from about 19,863 to 346,177 for an increase of about 326,314 during 10 fiscal years of impressive and substantial annual growth, trends, and stats. Despite weak growth trends and even years of horrific losses, this decade has seen an even greater increase to the aggregate endorsement total over what had ever been seen since program inception to September 30, 2007. When presenting this to Shannon Hicks, president of Reverse Focus, Inc., he referred to the comparison as the total endorsement picture before the Great Recession and then in the decade that followed.
Let us not be bound or limited by our myopic view of sales. Those who only consider month-to-month growth numbers, or even annual trends, are limiting their understanding of sales management. Sometimes it seems like our industry has been so seduced by the great monthly and annual trends of the prior decade (ended September 30, 2007) that we have overlooked how well we are actually doing in the aggregate in this decade, which ends in less than four months.
We had not even reached 350,000 in total endorsements by the end of the prior decade, September 30, 2007. Yet not only did we reach 500,000 total endorsements early this decade, but also early this fiscal year we celebrated reaching the mark of 1,000,000 total all-time endorsements. The average number of endorsements per year in the prior decade was 32,631 per year and 70,732 in this decade, which is an increase of 38,101 endorsements or 116.76%. Put another way, a 116.76% increase in average annual endorsements for an entire decade that started with two years of stagnation, followed by three years of horrific losses, and ended with five straight years of downward-sloping stagnation is not bad.
The point is we are still growing as an industry. But we can do even better. We should learn to look not just at short-term results but longer-term ones as well. Our industry should be very optimistic for its future and strive for even greater aggregate growth in the next decade.
*Editor’s note: This post has been updated with corrected endorsement figures from the author.