After several months of declines, reverse mortgage lenders rebounded in August, turning in a 15.8% increase in endorsements over the previous month.
Federal Housing Administration-approved lenders turned in 4,927 Home Equity Conversion Mortgage endorsements in August 2017, according to the most recent data from Reverse Market Insight. That number represents a significant bounce from the 4,254 logged in July — and the first increase since a blockbuster March segued into a slow decline throughout the spring and summer.
All 10 of the regions that the Dana Point, Calif.-based research firm tracks saw gains from July to August, and endorsement volumes continue to ride higher than in 2016.
American Advisors Group predictably leads the pack in terms of year-to-date loans, with 8,450 so far in 2017 — an 18% jump from this time last year. Finance of America Reverse has generated 33% more loans than at this time last year, taking second place with 3,541, and third-place Reverse Mortgage Funding has seen volume run 50% higher this year. Rounding out the top five are Liberty Home Equity Solutions and Synergy One Lending, the latter of which has seen a 58% improvement in endorsement figures over last year and a 34% boost in market share.
Rolling with the changes
RMI also weighed in on the changes coming to the reverse mortgage industry by October 2, predicting that origination fees could make a comeback amid the disappearance of the principal limit factor floor, as well as an all-out rush to the finish line as borrowers try to get their loans completed before the new restrictions go into effect.
In addition, RMI speculated that the trendy financial-planning use of the reverse mortgage — for instance, taking out a standby line of credit and allowing it to grow over time as a hedge against down markets — may have gotten significantly less attractive given the higher upfront mortgage insurance premium for borrowers taking less than 60% in their first year.
“If the borrower of the future is the financial planning customer looking to leverage a HECM to mitigate sequence of returns risk, then HECM just became substantially more costly as an option to do that,” RMI noted in its analysis.
Check out RMI’s full statistics here.
Written by Alex Spanko