April Wholesale Growth Outpaces Retail Reverse Mortgage Endorsements

Home Equity Conversion Mortgage (HECM) endorsements saw rise of 12.7 percent in April, hitting a threshold of 2,899 loans according to the latest data from Reverse Market Insight (RMI). Interestingly, while retail endorsement growth experienced a hike of 6.5 percent that month, wholesale growth easily outstripped it by growing at a rate of 21.2 percent.

“Strong Wholesale growth outpace[d] slower Retail results,” said RMI President John Lunde in a post introducing the data. “But both [channels are] contributing to a solid month of volume.”

When asked about the trend observed in comparing the wholesale versus retail channels for this month of data, Lunde told RMD that it has been continuing in this direction for a while, but may lead into a decrease in the near future.


“Wholesale has performed better than Retail volume the past four months on this report now, and is at 45 percent of the market in April,” Lunde told RMD in an email. “That market share is the highest it’s been in a year but seems more likely to recede a bit than continue increasing in the next few months given the prior 11 months were in a range of 36.8-41.8 percent, making this more of an anomaly so far.”

The brokers can also exhibit a faster reaction time to trends when compared to the Retail side of the business, Lunde added.

“We typically see Wholesale/brokers react faster to changes in the market volumes than Retail, so if that pattern holds we’d expect Retail volume to grow faster for a few months unless we see a strong surge in volume,” he said.

Stand-out performances from specific lenders include Liberty Home Equity Solutions, which saw an endorsement increase of 66.4 percent, leading the pack in terms of an observed endorsement increase and reaching its highest figures since March of 2018. San Diego, Calif.-based Synergy One Lending also grew by 19.7 percent to 164 loans for the month, while One Reverse increased by 16 percent to 247 loans.

Although the overall percentage figure is nearly identical to RMI’s previous April HECM Lenders report, Lunde previously detailed for RMD that the HECM Originators report is useful in seeing the splits in and health of the retail versus wholesale channels, which helps to illustrate how lenders are doing from a more individualized and channel-specific perspective.

Read the full HECM Originators report at RMI for specific breakdowns.

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  • It is hard to get excited or to think positive about industry production when total endorsements for the twelve months ended April 30, 2019 (trailing 12 month period) was only 33,701. A 12 month total so low, it has not been seen in almost 15 years, i.e., since the 12 months ended June 30, 2004.

    Then there is the 13.3% drop in total endorsements for the month of April 2018 to the month of April 2019.

    Total endorsements for the first seven months of fiscal 2019 is only 18,519 which is the lowest such total in this entire decade. The second worst endorsement total for the first seven months of any fiscal year in the last decade was 29,789 endorsements or 60.9% higher during the fiscal year 2016. The last time that the first seven months total endorsements for a fiscal year was lower than in fiscal 2019 was for the seven months ended April 30, 2003 when it just 8,822.

    While it is clear that the endorsements for April 2019 were 12.7% higher than the total for March 2019, how can we feel good about any month where the annualized total would be less than 34,900 but that is where we are.

    The rate of the HECM endorsement fall in fiscal 2019 is horrible. Yes, it is good that interest in proprietary reverse mortgages are up but volume of closings is still so low that the industry as an industry is not reporting it. Many were appalled by the idea that the industry as to HECM endorsements was in slightly downward secular stagnation from fiscal 2013 to fiscal 2018 but our situation in fiscal 2019 is actually worse, far worse.

    Can the industry do better with what it has in the way of products in fiscal 2020? Will there be any significant HUD changes to HECMs for 2020? Firm estimates for the total HECMs endorsed during fiscal 2019 should be coming soon. With coming investigations and at least one bankruptcy problem still afoot, the industry has its work cut out before it.

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