The expected fallout of reverse mortgage loan volume following program changes implemented on October 2, 2017 is beginning to emerge in terms of real numbers, according to data released Tuesday by industry data and analytics firm Reverse Market Insight (RMI).
With an endorsement decline of more than 17% during March, the industry saw its lowest loan production since July 2017. The July figure came prior to the October 2 changes which altered the mortgage insurance premium structure for borrowers and reduced principal limit factors for many.
With the endorsed loan count during the month at 4,300, “it will get worse before it gets better,” RMI wrote in its summary of the data.
From a regional perspective, eight of the top 10 Home Equity Conversion Mortgage markets fell, while a few lenders bucked the downward trend. Live Well Financial rose 34.7% during the month, Nationwide Equities (which has recently rebranded its reverse offering to Reverse Loans USA) surged by 34%, and One Reverse Mortgage eked out a 3.2% uptick with 261 loans in total.
In the post-October 2 operating environment, lenders and originators have speculated on the fallout, although it remains to be seen when the market will realize a “new normal.” In recent weeks, many have taken note of the heightened competition and changing lending climate, including new competition on interest rates and origination fees due to declining lender margins.
Future endorsement data will likely show a sustained downturn, based on industry estimates. For the time being, RMI noted, the climate will be different.
“And now it’s clear that we’re in a post 10/2 world for HECM endorsements,” RMI writes.
View the RMI report.
Written by Elizabeth Ecker