[UPDATED] Opinion: The Silver Lining in the New Endorsement Volume of This Decade

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.

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  • Let us not be bound or limited by our myopic view of sales. Those who only consider trends over decades are limiting their understanding of sales management. We are overlooking how well we are actually doing in the most recent 50 years.

    In the time period from 1917 – 1967 there was perhaps one reverse mortgage originated. From 1967 to 2017 there has been about one million reverse mortgages originated. This is one million percent more!

    On a more serious note, my point is that if you expand the timeframe that you measure out long enough you can
    make all industry trends as positive as you want them to be.

    It’s not just annual trends but also endorsement concentration ratios that suggest that our industry is currently in the maturity phase of the industry development life cycle ( http://www.investopedia.com/terms/i/industrylifecycle.asp?lgl=myfinance-layout ).

    Growth is slowing, firms are somewhat consolidated (currently a 4-firm concentration ratio of 60%), and there is not much product differentiation (The FHA-insured version is dominant). Thus I think arguing that our industry is still in the growth phase is a bit of a stretch.

    All this being said we can still be optimistic about the future and I think more aggregate growth in the next decade is certainly feasible :).

  • My friend Jim Veale wrote a very good article, his statistics are right on. I also strongly agree with Jim, when he says:

    “We are still growing as an industry but we can do better”!

    We have many new found opportunities we never had before, however, we also have a completely different business environment than we did before!

    FA has changed our industry, it may have eliminated close to 30% of the client base we had prior to April, 2015 but we have added so much in place of it.

    We have added a new found increased credibility rating to our product. We have opened the eyes of the professional sector in recognizing the HECM can be used as a credible and important retirement planning tool for their client base. Even the senior themselves look at the HECM differently than they did, it is not looked upon as purely a need based product anymore!

    Sure, we all need to go after new markets that fit the profile for the new HECM, we have to use a different approach with the professional. If we can adapt to the change in our industry, capitalize on FA the way we should, Jim Veils ending paragraph will be a reality for all those that follow the new path to success! I believe in what I just said, whole heartily!!

    John Smaldone

    • John,

      I appreciate your point of view but we disagree as to the degree of some of your claims. As stated in the past, I believe that the loss in new business from HECM Financial Assessment is much closer to 15% than 30%. That means I see a payoff from the exploits from those working with financial advisers but not as much as you. Also I do not see that HECMs are only barely seen with more credibility overall.

      My problem is that there is no independent party who is or can verify the claims you and I have made.

      What I never saw coming is what Jim has written about above. Those numbers are actually impressive for such a boutique mortgage product as HECMs. Also Jim has seemed to have increased his estimate for fiscal year 2017 to a figure (around 54,700) that is closer to the amount of endorsements (56,000) that is expected for this current fiscal year based on this being an up leg in the current pattern of secular stagnation (yes, secular stagnation — specifically for those who have expressed their desire to control the information provided about the true condition of the industry. I want to thank this group for their snide remarks since this clearly shows how close this description cuts to the current condition of HECM endorsement growth).

      Why didn’t NRMLA express this in its run down of the last 30 years of HECMs in the current edition of their flagship publication? Its leadership’s pessimism is exposed in how much they defended the problems of this decade. When it came to a description of endorsements for the decade they failed to call fiscal years 2010, 2011, and 2012 as the years of the terrible losses they were. Jim does that above but also draws out the positive from the same information. Jim’s style of writing expresses positive realism. When the ultra optimists of this industry write about this decade all they seem to leave us with is pessimism. Then they want us to see optimism for the next decade without any real foundation for that optimism. They just do not seem to get it.

      What Jim wrote provides me with some hope for the fiscal years after 2020. His view of Baby Boomers seems well reasoned but that does not mean that he is necessarily right either.

  • Thank you for the detailed response Mr. Veale.

    Wow, it’s like everyone I talk to knows him! It’s nice to meet you. You seem like a very knowledgeable, smart, friendly person with a lot of experience and I hope to meet you in person one day.

    I’ve only been in the industry for two years and already I have learned so much. However there is so much more to learn I feel like I’ve just learned about a single rock that fell off a mountain.

    I hope you are right. I hope it’s just all of the wild misconceptions out there that are temporarily holding the industry back. There are a lot of people out there that could really benefit from this and it seems as if 80% of them aren’t yet taking advantage of it.

    • Mr. Linger,

      Your voice is a welcome addition on RMD. Please continue your activity in this regard.

      A big mistake people make is not to stay a student of the HECM. It is an interesting product and we still have a lot more to learn about it and how seniors can benefit from it.

      I hope to see the day when the cash management advantages of HECMs are heralded in our marketing and advertising.

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