HECM Endorsements Hit New Low Following October 2017 Changes

Home Equity Conversion Mortgage (HECM) endorsements dropped in November by 17.4 percent, representing a new low in volume since HECM rule changes were put into effect by the U.S. Department of Housing and Urban Development (HUD) in October, 2017.

“New lows, here we are,” said John Lunde, founder and president of Reverse Mortgage Insight (RMI), in introducing the new data.

According to the HECM Lenders report from Reverse Market Insight, Federal Housing Administration (FHA)-approved lenders endorsed 2,553 loans in November, 2018, with all top 10 lenders experiencing declines during the month. Least affected by the decline from October into November was Madison, Wis.-based Fairway Independent Mortgage Corporation, which only saw one fewer origination compared with last month for a total of 76. It is ranked number nine on the list of top 10 lenders in the report.


A new potential low depends on a few different factors, Lunde said.

“When and how low the bottom might be for HECM endorsements depends a lot on how much of the drop is due to proprietary loan strength versus consumer disinterest in the value proposition of the loans at the current principal limit factors (PLF) and cost levels,” he told RMD.

Only one of the highlighted top 10 regions showed improvement in general performance. The Great Plains – number 10 on the regional list – generated two more endorsements over October 2018, moving to 65. November marks the second consecutive month that the Great Plains region showed gains.

The Great Plains’ November number is still roughly only a tenth of the top performing Pacific/Hawaii region, however. Still, Lunde adds that the Pacific/Hawaii region is a good example of “how far the industry has fallen,” citing a drop of 68.1 percent from January of this year to settle at 651 loans in November.

Read the full HECM Lenders report for November 2018.

Written by Chris Clow

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  • Personally, I don’t fully agree with John Lunde, as far as the drop may be due in part, due to proprietary loan strength versus consumer disinterest in the value proposition of the loans at the current principal limit
    factors (PLF) and costs. I value John’s opinions but once in a while, I disagree!

    I feel if anything, the proprietary products have brought more attention to the reverse mortgage! I also feel that what we are seeing, as far as the increase in the volume and interest on the part of seniors and loan originators in the proprietary products is because the product is filling the gaps the HECM can’t fill!

    The fall in HECM endorsements is a mushroom effect still hung over from the 2017 PLF adjustments. Plus, the holiday season is upon us as well as the image of fear the industry has created in the minds of our senior clients has not helped the situation. Naturally the changes of 2017 has made a major effect on new origination’s and endorsements!

    Loan originators and their companies found themselves with many borrowers close to coming to fruition fall apart because of the PLF adjustments.

    The HECM and the proprietary product can live together and compliment one another. We need to learn how to use the tools and interface them with one another!

    We need to get over the 2017 changes to the HECM and realize it is still a viable product!!

    My opinion all, you judge for yourselves!

    John A. Smaldone

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