Retail Leads Wholesale in February Reverse Mortgage Endorsement Drop

Home Equity Conversion Mortgage (HECM) endorsements fell by 13.7% in the month of February 2020, for a total of 3,381 loans according to the latest HECM Originators report from Reverse Market Insight (RMI). The fall was led by the retail endorsement segment of business, which experienced an decrease of 24.4% that month, while wholesale levels recorded a much smaller decrease of 1.7%.

While the top 10 lenders did better as a collective group than the rest of the industry – dropping by 11.9% compared with the industry’s 13.7% – some lenders maintained very strong performances according to the data. Fairway Independent Mortgage Corporation saw a rise of 61.3% to 150 loans, its highest showing in over a year.

Liberty Reverse Mortgage saw a rise of 20.3% to finish the month with 794 loans, proving that “January was more than a single month of catching up on endorsing loans,” according to RMI’s accompanying commentary. Finance of America Reverse (FAR) enjoyed a jump of 14.5% to 481 loans, showing its highest volume in over a year similarly to Fairway’s strong showing for the month.

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The rise in endorsements among these lenders within the stable of the top 10 is a generally good sign for the industry, according to RMI President John Lunde.

“FAR is doing well and above their recent averages. Liberty strikes me as significantly above their trend last year,” Lunde told RMD. “January struck me as a catch-up [month] from not endorsing in December, but with February coming in even stronger it would seem to be more than just backlog clearing.”

This likely means that some of the economic factors late last year helped feed the industry some big numbers, Lunde adds.

“Putting these both together suggests to me that the low interest rates toward the end of last year produced significantly higher volume, and particularly refis which we’ve seen spiking in the past 2 quarters,” Lunde said. “That usually bodes well for wholesale volume which we’ve definitely seen in January/February on this report.”

Although the overall percentage figure is nearly identical to RMI’s previous February 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 HECM Originators report at RMI for specific breakdowns and more regional performance data.

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