HECM Endorsements Rise 2.6%, Volume Expected to Increase

While volume remains low, overall Home Equity Conversion Mortgage endorsements rose by 2.6% in July, according to Reverse Market Insight’s most recent data.

Up from 2,833 in June, lenders endorsed a total of 2,907 loans last month. The increase was driven entirely by wholesale endorsements, which were up 12.2% over June for the first recorded increase since January, the month when endorsements reached their post-October 2 peak. Retail numbers lagged behind with a 3% decrease.

Of the top 10 lenders, American Advisors Group led the pack with 825 endorsements — a decrease from June’s 906. Following AAG were Finance of America of Reverse and Reverse Mortgage Funding, which both saw increases over June.

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By comparing this data with January’s, RMI made some interesting observations about the top 10 lenders. For example, all lenders experienced a decline ranging from 24% to 73.2%. Faring the best was One Reverse Mortgage,  which fell from 296 loans in January to 225 endorsements in July.

“There’s a clear call center theme to that list on first glance,” according to a statement from the Dana Point, Calif.-based RMI.  “We’re not saying that’s a panacea for the current market conditions, but it’s an obvious similarity among these lenders that are weathering the volume decline better than their peers thus far.”

RMI president John Lunde said he foresees continued increases as long as the industry can keep up with borrower needs.

“Volume is creeping up, which is what I’d expect in the next several months,” Lunde told RMD. “I’d compare it to the recovery from Financial Assessment that took so long — which says as long as the demand is there for cash flow in retirement, the capability is there, and the product makes sense, then we’ll see continued volume.”

He said the biggest stumbling block would be the HECM’s decreased principal limit factors, but “overall there’s still a viable value proposition for borrowers.”

Because the broker/wholesale market can be more volatile, Lunde said continued improvement in retail numbers would be an even more important sign of recovery

In the coming year, Lunde said he expects the space to be increasingly shared by proprietary products that lenders are marketing beyond homeowners with high-value properties to help potential borrowers fill voids left by HECM program changes and restrictions.

“It is likely to be some time before we see a direct head-to-head challenger to HECM, but I’d expect we see that within the next three years as more and more of the borrower-use case scenarios are targeted by non-HECM products,” Lunde said.

Written by Maggie Callahan

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  • Three days later (9/29/2018), I question if the July count is so encouraging. Let us not get too caught up in the cheap celebration of recovery.

    The endorsement count for September 2018, the final month of fiscal 2018, was just announced by HUD and it was just 2,880 endorsements for a drop of 10% in endorsements from the August 2018 endorsement count.

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