Reverse Mortgage Endorsements Splashed with ‘Cold Water’ in August

Home Equity Conversion Mortgage (HECM) endorsements fell by 15 percent to 2,341 loans for the month of August 2019, a disappointing figure considering that the past six months have seen more positive endorsement activity spinning out of the uncertainty exhibited at the start of the year. This is according to the August HECM Lenders report compiled by Reverse Market Insight (RMI).

However, a favorable interest rate environment could indicate that August’s endorsement levels may be an outlier as opposed to the start of a new downward trend, according to RMI President John Lunde.

“[August’s endorsements are] throwing a little cold water on the industry after 6 months of relatively optimistic endorsement volumes,” Lunde writes in his commentary accompanying the data. “This could easily be a blip given the lower interest rates easing lenders’ path to higher principal limits, but that’s always the trouble with endorsements being such a lagging indicator.”

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The performance drop was observed across all recorded regions of HECM activity, indicating that it was not an isolated occurrence. The Great Plains region was least impacted, recording only a 3.8 percent fall to 50 loans. Meanwhile the Pacific/Hawaii region fell 6.8 percent to 711 loans, while the Southeast/Caribbean region dropped 10.8 percent to 413 loans.

From a lender-specific perspective, several companies managed to outperform specific regional endorsement levels, with five of the top 10 reverse mortgage lenders recording overall gains in endorsement activity. For instance, HighTechLending recorded a 171.4 percent jump to 76 loans, which has come very close to overtaking Longbridge Financial’s position at number 9 on the top 10 list.

However, Longbridge is no pushover, holding off HighTech and maintaining its position by recording 36 percent growth to 68 loans. One Reverse also recorded a gain of 3.8 percent to 249 loans.

Although it has dropped to number eight on the top 10 list, embattled former lender Live Well Financial has managed to hold its position in the top 10 even with no recorded endorsements for the month of August. According to RMI data, Live Well recorded 97 endorsements in the month of May when it closed its doors, and recorded 1 endorsement each in both June and July, respectively.

Read the full HECM Lenders report for August at RMI for specific breakdowns and detailed regional performance data.

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