Reverse Mortgage Endorsements Get ‘Sugar Rush’ in October

Home Equity Conversion Mortgage (HECM) endorsements rose by 36.2% to 3,296 loans for the month of October 2019, a boon to the activity observed over the last couple of months with all major regions and the majority of the top 10 lenders recording increases in activity. This is according to the October HECM Lenders report compiled by Reverse Market Insight (RMI).

“[October’s activity is] providing a nice sugar rush to this post-Halloween morning for reverse industry folks,” said RMI President John Lunde in the commentary accompanying the data.

While every major region posted gains, particular regional standouts include New York/New Jersey (rising 72% to 215 loans); New England (59% to 124 loans); and the Southwest U.S. (53.9% to 314 loans).


Seven of the industry’s top 10 lenders posted gains, with the most prominent increase coming from HighTechLending (rising 66.7% to 65 loans). American Advisors Group (AAG) posted an impressive 61.4% increase to 1,277 loans, a figure that on its own is larger than the second- and third-highest lender totals combined, Lunde notes.

Rounding out the major gains is Synergy One Lending, posting a 53.9% increase to 314 loans.

In terms of how this data could telegraph endorsement figures for the remainder of the year, Lunde said that a favorable interest rate environment could end up being generally positive for the endorsements that will arrive through the end of 2019.

“I’d expect some continued lumpiness, but as long as the 10-year rates continue to be well below the PLF floor of 3%, it’s an encouraging sign for reverse mortgage volume,” Lunde told RMD in an email.

Still technically listed among the top 10 for year-to-date numbers is shuttered lender Live Well Financial, which has dropped to the number nine lender for 2019 in year-to-date figures. Excluding Live Well from the list would HighTechLending and Open Mortgage the ninth- and tenth-highest ranked lenders, respectively.

As noted last month, leaders in the U.S. House of Representatives and U.S. Senate will have to take action by the end of the month to avoid another partial federal government shutdown at the end of the year, as seen in December 2018-February 2019. Lawmakers have until November 21 to either reach a new funding deal for the next year, or to pass another stopgap bill that will expire just before Christmas.

If Congress fails to act or pass another stopgap bill by that point, it’s possible that a new shutdown could take place at the exact same point in time that the last one did, and for the same overarching reasons.

Read the HECM Lenders report at RMI.

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  • 3,296 is only 6.6% higher than the total HECMs endorsed during October 2018 but is 36.2% higher than the total HECMs endorsed during September 2018. The total endorsements for October 2019 are also the second lowest total for any October since October 2004.

    So while things are definitely better than for endorsements for the month of September 2019, they are not all that great. A 6.6% rounding error at this volume is little more than a rounding error. As New View Advisors (NVA) correctly cites monthly HECM endorsement counts can be manipulated but not as much by lenders as contends but by unintentional actions of HUD. For example, HUD could allow endorsement employees time off in the same month and may not have it their budget to make it up through overtime. HUD could also reassign staff to more pressing areas especially at fiscal year end (September 30, 2019).

    So we have to ask ourselves, was the potential endorsement count forsaken in September to take care of other issues, were key endorsement personnel out on some kind of leave or was it a factor of those two with yet another cause not listed? That is why cumulative totals for six months or more are generally more reliable than monthly totals on their own.

    But nothing change the fact that October 2019 total HECM endorsements are the second lowest for any October since 2004. It is hard to believe that any industry participant would get any kind of high from a total of 3,296. People are trying too hard to appear to be optimistic.

    As of today, the end of 10% of this fiscal year will end. There is absolutely nothing that says endorsements for this fiscal year will be materially higher than for fiscal 2019. Depending on the actions of Secretary Carson, things could easily get worse.

    The release of the HUD Annual Report to Congress on the Financial Status of the FHA MMIF for last fiscal year quickly gets nearer as does its review as to the HECM portion of the MMIF by independent actuaries. We legitimately have many questions, most of which should be answered in these two documents. Then we will focus on comments and responses by HUD.

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