Monthly Reverse Mortgage Figures Continue Falling, Drop 12.1%

Reverse mortgage endorsement figures dropped 12.1% between June and July, continuing a pattern of monthly declines after an early-year peak.

Federal Housing Administration-approved Home Equity Conversion Mortgage lenders generated 4,254 endorsements last month, according to the most recent data from Reverse Market Insight, Inc — a decline of 583 from June’s total and a drop-off of more than 1,000 loans from a blockbuster March.

“That drop completed the round trip back to February volume levels after a large increase in March, although staying slightly above the monthly average from last year,” the Dana Point, Calif.-based research firm noted in its analysis.

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Nine of the 10 regions that RMI tracks saw declines last month, with the only positive coming from the Great Plains and its 10-loan gain from June.

All top 10 lenders saw monthly declines, with industry leader American Advisors Group dropping from 1,126 to 986 and second-place Finance of America Reverse slipping from 532 to 504; rounding out the top five for the month were Reverse Mortgage Funding, Synergy One Lending, and Liberty Home Equity Solutions.

Notably, Reverse Mortgage Solutions and Security One Lending recorded their first month of zero endorsements since their owner, Walter Investment Management Corporation (NYSE: WAC), shuttered their origination businesses in January. After recording just eight in February, the remaining RMS/Security One pipeline managed to generate 228 and 222 endorsements in April and May, before falling to 26 in June and recording the goose egg last month.

Check out the full results at RMI.

Written by Alex Spanko

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  • July 2017 saw the third lowest endorsement count for any month since November 2016. It is also the fourth lowest endorsement count for any July in this decade. HOWEVER, the endorsement count for July 2017 is over 20% higher than the endorsement count for July 2016.

    The July 2017 count is lower than the monthly average for the nine months that preceded it. Yet the total for July 2017 is somewhat higher than expected. Now it seems not only will this fiscal year total be the up leg that was expected for the current pattern of secular stagnation but it could easily come within 1,500 endorsements (54,500 endorsements) of the endorsements predicted (56,000) from the pattern of this stagnation. Prior peaks were a little over 60,000 (fiscal year 2013) and 58,000 (fiscal year 2015).

    Google states that the word “secular” in secular stagnation is used in contrast to cyclical or short-term, and suggests a change of fundamental dynamics which would play out only in its own time. Dr. Larry Summers, former Secretary of the Treasury under President Clinton and current professor in economics at Harvard, made a very interesting observation about this condition in a blog on September 8, 2014: “Secular stagnation in my version, like that of Alvin Hansen, the economist who coined the term in the 1930s, has emphasised the difficulty of maintaining sufficient demand to permit normal levels of output.” Dr. Alvin Hansen advised FDR on Social Security and the creation of the Council on Economic Advisers. As a widely read Professor at Harvard, he is credited as introducing, popularizing, pragmatizing, and defending “The General Theory” of Lord John Maynard Keynes, a British economist and for that Hansen is known as the American Keynes.

    The title of the Summer’s blog is: “Bold Reform is the Only Answer to Secular Stagnation.” One of the chief causes of Secular Stagnation is a lack of growth in the segment of the population which is most critical to demand. We should see the latter begin to recede as Baby Boomers begin turning 74 (the average historic age of the youngest HECM borrower at closing) in 2020 and beyond. As to bold policy, a higher regulated product makes the institution of such policy difficult at best. The problem is leadership in our industry can only be described as passive to reactive. The need is NOT for a change in leadership but for a change in its approach in moving forward to a far more proactive approach.

    The mistake of allowing fixed rate Standard HECMs to fester cannot be undone but should be rebuffed where seen. Unfortunately no one is doing this in regard to the obvious overuse of fixed rate HECMs in H4P production. It is time for industry leadership to step forward AND in this way show that we do not want our borrowers to be unnecessarily harmed from the “mistaken” recommendations of our own originators.

    The point is secular stagnation does “play out, only in its own time” [sic] or we have the opportunity to turn it around earlier, perhaps much earlier. Trying to weed out the voices that see and communicate the facts about secular stagnation is anything but productive or proactive in moving FORWARD.

  • This is not good news, however, we are in a different market place today, versos the days of yesteryear!

    I am not blaming that entirely for the continued drop but it does have a baring on things.

    I have said this many times and i will say it again, we need to go after the more affluent, the professional sector comprising of fiduciaries, focus on small community banks and credit unions!

    In short, we all need to look at the reverse mortgage industry completely different than we did in the past. I continually stress the point that the HECM is more of a retirement planning tool than ever before.

    Sure, we need to never forget our passion for our seniors, we have to be there to help them in any way we can, get them out of debt and improve their quality of living! At the same time, we must realize, we can’t be the saving grace Angel to every senior that owns a home anymore. We are in a time where people have to qualify for a reverse mortgage, this is the game changer, we must focus on that different market!

    I am still a believer in many of the old marketing methods, get out there and hold educational workshops at senior centers, team up with elder law attorneys and home health care providers! Expose yourself and your brand in your communities!

    We can do a lot more than what we are doing to stimulate business, we have a great product and it can do so much good for our seniors, we must believe that and work harder at it today more than ever!

    John A. Smaldone
    http://www.hanover-financial.com

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