Reverse Mortgage Endorsements See September Drop, Narrowly Missing All-Time Low

A new Home Equity Conversion Mortgage (HECM) originators report published by Reverse Market Insight (RMI) describes a drop in September that “narrowly” missed out an all-time monthly low since new rule changes were handed down in October of 2017.

According to the report, HECM endorsements dropped -9.9 percent to 2,874 loans in September. The report also notes that the decline was “broad based,” showing very little difference between drops in the retail (-9.8 percent) and wholesale (-10.1 percent) markets.

Still, the report also notes that the retail side’s drop did set a new low at 1,695 loans, which the report details may indicate “less of an interest in reverse by relatively larger FHA approved lenders compared to relatively smaller brokers in the wake of last year’s changes.”

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When asked to expand on the point concerning retail, RMI founder and president John Lunde told RMD that it could be read in a couple of different ways. First, “Retail volume typically takes longer to adjust to changes, both good and bad,” he said. “[Second,] retail volume is typically [made up of]  larger companies given that it’s defined here as FHA approved lenders originating HECM without a sponsor or principal/agent relationship.”

Still, “retail is a higher percentage of total endorsements than it was a year ago,” Lunde said.  He detailed that last October, retail composed 52.6% of HECM endorsements before then dropping to a low of 50.5% in January – the peak endorsement month after the most recent product changes – and 59% in September.

Lunde sums up what he feels is the biggest takeaway. “At the end of the day, the most significant point is that Retail is still declining. The rest of the story has yet to be written as to where we are in the process of recovery for each channel,” he said.

You can find RMI’s full HECM originators list by clicking here.

Written by Chris Clow

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  • Since the endorsement count for September 2018 was known on Saturday September 29, 2018 when it was posted by HUD on its website, the total endorsements for September 2018 is not news even though the breakout of that count most certainly is.

    Be prepared. There is over a 60% chance that in the next three months [November, December and January (2019)], the industry will experience a single month of endorsements that is lower than the endorsements (2,838) of June 2018.

    How can industry statistical leadership be talking about recovery when no one is sure if the monthly endorsement counts have reached bottom since the 10/2/2017 changes? After all the September 2018 endorsement count was just 43 endorsements from going below the latest nadir.

    Talk of recovery is one thing; getting it done is entirely different.

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