Retail Segment Leads October Jump in Reverse Mortgage Endorsements

Home Equity Conversion Mortgage (HECM) endorsements rose by 36% in the month of October, for a total of 2,551 loans according to the latest HECM Originators report from Reverse Market Insight (RMI). The rise was led by the retail endorsement segment of business, which experienced an increase of 45% that month, while wholesale levels recorded a smaller increase of 22.7%.

Unlike another rise in February that was driven primarily by an obfuscation in the data due to the lingering disruption of a partial federal government shutdown, the increase seen in October is descended from a favorable rate environment according to RMI President John Lunde.

“That’s the highest monthly total since February, and that was fueled more by a backlog of endorsement activity rather than the higher origination volumes driven by lower interest rates as is currently the case,” Lunde said in his commentary accompanying the data.

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While the top 10 lenders are described as “underperforming slightly,” many of them experienced positive gains for the month. Leading the way is American Advisors Group (AAG), which posted a 62.9% increase to 1,337 loans, more than four times the number of the next closest lender.

One Reverse Mortgage recorded an increase of 53.5% to 284 loans, while Liberty Home Equity Solutions gained 52.1% to rise to 213 loans. After a down month experienced in September, HighTechLending recorded a 66.7% increase to 65 loans, marking a “bounce back,” according to Lunde.

Although the overall percentage figure is nearly identical to RMI’s previous October 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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  • The news is good overall, but does it reflect what the future endorsement momentum will be in 2020. That question is the $64,000 wonder of the world!

    My friend Jim Veale usually has some very good statistics to articles like this. However, here again, at this point, everything would be speculation.

    Obviously I like ti look at the bright side of things, I am hopeful the momentum will be positive and continue. Time will tell if we all can make the Arrow continue to travel in an upward direction?

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      In an effort not to disappoint, here are a few of my observations.

      Comparing September 2019 to October 2019, we see an increase of just 863 endorsements. 15% of that increase comes from an increase in HECM Refis and 5% comes from a rise in H4P which means that 80% comes from Traditional HECMs.

      It was good to see that the October 2019 endorsements were 6.6% higher than the endorsements for October 2018. However, the October 2019 total is also the second worst October total for any October since October 2002. Only October 2018 had worse total endorsements for any October since October 2002.

      So while some may be pleased by a 36.2% increase from a very low total for September 2019, how can anyone be pleased with October 2019 being the second worst October for total endorsements for any October since October 2002? If total endorsements for fiscal 2020 are only 6.6% larger than for fiscal 2019, total endorsements would only be about 33,300 for another miserable fiscal year HECM endorsement total.

      So let us not get overly excited about a one month substantial PERCENTAGE increase unless such total such monthly increases will get us back to the 48,359 endorsement level of fiscal 2018 in fiscal year 2020. Ultra optimism quickly leads to irrational exuberance. Many times panning fool’s gold led to huge increases in gold fever. A 6.6% increase is really not all that much.

      Don’t get lost in percentage statistics. They can easily mislead us about the direction we are going. Total endorsements for fiscal 2019 was exactly the opposite since it showed the endorsement weakness of fiscal 2019.

      • Jim,

        This is why I said in my comment, “My friend Jim Veale usually has some very good statistics to articles like this”, and you did!

        Thank you Jim for sharing your opinion and honoring my request!

        Have a Happy New Year my friend,

        John A. Smaldone
        http://www.hanover-financial.com

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