Top 10 Reverse Mortgage Lenders Reshuffle in 2019

While the reverse mortgage industry has seen its share of change, the top-10 lenders by volume has remained relatively unchanged over the last year. Yet the lender rankings within the top 10 have shifted, to present a top-10 in October 2019 that looks different in some ways from the same tabulation a year earlier.

RankCompany in Oct. 2019Company in Oct. 20182019 Rank Change
1AAGAAGHold
2One ReverseFAROne Reverse +2
3FARRMFFAR -1
4RMFOne ReverseRMF -1
5Synergy OneLiberty Home EquitySynergy One +1
6Liberty Home EquitySynergy OneLiberty -1
7FairwayLive Well FinancialFairway +2
8Longbridge FinancialHighTechLendingLongbridge +3
9HighTechLendingFairwayHighTech -1
10Open MortgageOpen MortgageHold

In terms of the top 10 in 2019 versus 2018, both the first and tenth places have managed to hold onto their respective positions: American Advisors Group (AAG) has maintained its position as the number 1 lender in the country, while Open Mortgage has kept its spot as the tenth-ranked lender. Last year’s number 7 lender, Live Well Financial, has been effectively taken off the board due to its abrupt closure in May of this year.

The following figures are gathered from U.S. Department of Housing and Urban Development (HUD) data and Reverse Market Insight (RMI).

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Volume gains, losses

Comparing total Home Equity Conversion Mortgage (HECM) endorsements from fiscal year (FY) 2018 to FY 2019, the industry contracted by approximately 17,000 loans, marking for a 35.3% drop in overall endorsement volume. 7 of the top 10 lenders are either at par with or below a 35% reduction in volume, while only one company in the top 10 has managed to increase their numbers over their 2018 figures.

Fairway Independent Mortgage Corporation has managed to increase its volume by 11% over 2018 figures, settling at 906 loans in 2019 while growing its overall market share to 3.3% from 2.2% in 2018.

“Fairway has a unique culture. The leadership, branch managers, and many loan officers have embraced the product and it is gradually spreading throughout the organization which is hard to find in a forward mortgage company,” says Jared Gibbons, national reverse mortgage sales manager at Fairway in an October interview with RMD. “[Our] culture of doing what is right for the client helps reverse mortgages to be accepted.”

Two of the top 10 lenders saw volume drops that were even larger than the industry’s average. Finance of America Reverse (FAR) has lost 41% of its 2018 volume for a figure of 2,103 loans in fiscal 2019, while Liberty Home Equity Solutions has lost 44% of its 2018 volume to settle at 1,338 loans for this fiscal year. HighTechLending, the number 9 lender as of October 2019, saw a volume drop that was on par with the industry average, losing 35% of its 2018 volume to settle at 558 loans in 2019.

Of the top 10 lenders that observed a drop in volume, the least severe drop comes from One Reverse Mortgage, recording only a 6% drop from 2018 figures to settle at 2,298 loans for 2019 placing it just below AAG to bring it to the second largest lender by volume.

The top 10 sees only one new entrant in 2019: Mahwah, N.J.-based Longbridge Financial, which jumped three places from its 2018 position to rank as the eighth biggest reverse mortgage lender in the country. Longbridge managed to gain slightly on its total market share in spite of a 21% volume loss year-over-year, settling at 573 loans as of October 2019.

Impact of proprietary products

Originations for proprietary reverse mortgage products from the lenders are not shared by the companies publicly, but several of the major lenders continue to tout proprietary product innovations as a path toward future prosperity in the reverse mortgage industry. FAR continues to create different variations of its HomeSafe proprietary product, which is also offered by AAG in a correspondent partnership with FAR.

One Reverse continues to offer its “Home Equity Loan Optimizer” (HELO), while RMF offers both “Equity Edge” and “Equity Elite,” while Longbridge competes through its offering of “The Platinum.” Liberty Home Equity Solutions entered the proprietary market earlier this year with the introduction of its “EquityIQ” offering.

While this helps to paint a picture for what the future of the reverse mortgage product landscape can look like in an arena unbound by the specific regulations that govern traditional HECMs, some companies feel that it’s important not to over-extend into the proprietary space. Don Currie, president of HighTechLending, oversees a company that offers a suite of different proprietary products from FAR, Longbridge and RMF, but doesn’t want the proprietary space to move too far, too fast.

“I’m happy with the progress that we’re making, and [think] that it’s really important that we don’t get too aggressive,” Currie told RMD in a recent interview. “Because we know what happens when we get too aggressive in this industry. And I think that they the gradual broadening of the proprietary guidelines is is going at a pace that I’m very happy with.”

Adding the growth of the proprietary product to the continued evolution of regulations that lenders have to adjust to will also help to further refine the reverse mortgage industry on both the lender and borrower sides, Currie says. Additionally, the head of another company sees the future of the proprietary product as helping to provide a solution to a concern many borrowers have about the upfront costs associated with a HECM.

“With a proprietary product and costs very similar to what a traditional loan looks like, I think you’re going to see a big turnover in the market,” said David Peskin, president of RMF on the first episode of The RMD Podcast earlier this year. “I think you’ll find a lot more people looking at thinking about refinancing into a proprietary loan, just because of the flexibility of the payments, and because of the costs associated.”

HECM program health

Officials from the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) continue to publicly state that they are encouraged by the health of the HECM program inside the Mutual Mortgage Insurance Fund (MMIF), which recent quarterly reports have estimated is generating a small amount of cash receipts for the federal government.

FHA Commissioner and Acting Deputy HUD Secretary Brian D. Montgomery previously shared that he found the financial estimates of the program’s performance encouraging, while HUD Secretary Ben Carson recently said that program changes to principal limit factors and the introduction of a collateral risk assessment have had a “directionally positive” impact on the program’s fiscal solvency.

A further look at the health of the HECM program will come later this month, when the independent actuarial review of the MMIF is expected to be released.

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  • Comments that are made at this point in November by HUD on the Financial Status of the MMIF for fiscal 2019 should be fairly accurate. The release of both the HUD report on the financial status of the MMIF for last fiscal year and the review of that report by independent actuaries are normally published on 11/15 of each year and posted on that date to the HUD website.

    The report for last fiscal year is particularly important since there has been much talk by HUD executives about the improvement of the HECM portion of the MMIF. As of yet we have no idea if that is reflected in both the economic net worth of that portion or in the net present value of the future cash flows from the HECMs endorsed after 9/30/2008. Then the question arises on the net present value (NPV) of the future cash flow (FCF) on all HECMs endorsed in fiscal 2019 and only fiscal 2019. While we all should expect some drop in the based on a 35.3% drop in endorsed HECMs during fiscal 2019 versus fiscal 2018, will the drop in the negative NPV be at least 35.3%?

    The HECMs endorsed in fiscal 2018 and only fiscal 2018 had a NPV of the FCF of a negative $1.546 billion. So with the drop in HECMs endorsed during fiscal 2019 and only fiscal 2019 of 35.3%, we should expect the negative NPV of the FCF for fiscal 2019 to be about $1 billion. If the negative NPV is projected to be
    $1.25 billion that simply means the negative NPV is more than expected for the smaller crop of endorsed HECMs during fiscal 2019. If the negative NPV is about $0.75 billion for fiscal 2019, that means the loss per HECM endorsed in fiscal 2019 is less on a per HECM basis than for fiscal 2018, which would be an improvement.

    Rather than speculating any further, let us close by saying that seeing a materially lower cost per HECM for fiscal 2019 would be a very welcomed achievement for the staff at HUD.

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