Home Equity Conversion Mortgage (HECM) endorsements dropped again in December by 31.4 percent, representing a second consecutive new low in volume since the influential changes to principal limit factors (PLFs) instituted by the U.S. Department of Housing and Urban Development (HUD) in October 2017.
“If the government shutdown didn’t get you down for year end, this last round of HECM endorsement numbers should have done the trick,” said John Lunde, founder and president of Reverse Mortgage Insight (RMI), in introducing the data in the firm’s December 2018 HECM Lenders report. “Good thing our industry is populated with eternal optimists and gluttons for punishment,” he said.
According to the report, Federal Housing Administration (FHA)-approved lenders endorsed 1,751 loans in December 2018. Once again, all top 10 lenders experienced declines over the course of that month. Unlike November, however, none of the geographical regions measured in the report were spared a drop in general performance. In both October and November 2018, the Great Plains region saw a minor uptick in performance, but that was not the case in December.
Complicating endorsement levels for the month was the partial government shutdown that went into effect on December 22, which reduced volume even further. However, Lunde notes that only five of the month’s 20 working days were affected by the government gridlock, and “that adjustment would only take volume to 2,335 loans,” he said.
“Shutdown adds significant noise to analyzing endorsements,” Lunde told RMD when asked how the status of the government impacts HECM endorsement analysis. “We took the simple approach [when composing our report] and simply adjusted for lost business days.”
The three leading endorsement firms were American Advisors Group (AAG), Finance of America Reverse (FAR) and Reverse Mortgage Funding (RMF), respectively.
Read the full HECM Lenders report for December 2018.