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As Reverse Mortgage Volume Tightens, These Markets Are Letting Loose

As far as reverse mortgage volume is concerned in 2016, the industry is on track to see one of the lowest years for endorsements in recent history. Although constrained volumes have plagued many of the nation’s top-producing markets nationwide, other areas continue to demonstrate their resiliency to the widespread declines.

Home Equity Conversion Mortgage (HECM) endorsements totaled 3,534 loans in July, signaling the lowest month for volume this year, according to the latest industry data tracked by Reverse Market Insight. The month—echoing a recent low point of 3,256 units achieved in August 2014—did see endorsements increase in four regions on a monthly basis, however, only one of those regions reported volume growth year-to-date (YTD) through July.

That region: Rocky Mountain. Though the region’s 230 units in July outgrew its previous month tally by just a single loan, the area reports volume up 7.4% YTD in 2016.

Rocky Mountain continues to be carried by the production in its largest market, Denver, whose 1,038 units through July represent an increase of 25.5% compared to the same seven-month period last year. On a monthly basis, Denver added 138 units in July.

Also continuing to experience notable growth within the Rocky Mountain region is Fargo, N.D. Though Fargo is not the largest HECM producer within the region—adding just four HECMs in July—the market has grown its volume 25.9% YTD in 2016 compared to last year.

Much of the YTD endorsement growth is happening out west, with regions such as the Northwest and Pacific Coast states reporting volume that is 15.9% and 2.2% higher than their year-ago levels, respectively.

In the Northwest, the region’s largest HECM-producing markets, Seattle and Portland, Ore., continue to boost volume. In July, Seattle added 93 loans, while Portland grew its volume by 72 units. With July in the books, this brings the YTD volume for both markets up 21% and 26.6% compared to last year.

Down the coast, the nation’s largest HECM-producing region, the Pacific/Hawaii, also reported modest growth compared to last year. Through July, HECM endorsement volume in the region is up 2.2% YTD over last year.

Sacramento, Calif., and Reno, Nev., led the way with the largest YTD growth of 34% and 33.7%. On a monthly basis, Sacramento produced 85 units in July, while Reno upped its endorsement count by 25 units to bring itself to a total 164 loans through the first seven months of 2016.

The Pacific/Hawaii region also saw YTD increases through July from markets like Phoenix (10.2%), San Diego (6.9%), Fresno, Calif. (11.7%) and Honolulu (1.9%), while seeing declines of less than 5% from its largest markets, including Los Angeles (-4.2%), Santa Ana (-2.8%) and San Francisco (-0.4%).

As one of the largest HECM-producing states, California has historically performed well when it comes to volume, said Reverse Market President John Lunde, acknowledging that the state is home to many reverse mortgage lenders.

Through July, the Pacific/Hawaii region totals 7,940 loans this year. During this time period, the region reports a volume per lender ratio of 13.2, which is higher than any other region in the U.S. But while California and company can usually be counted on to produce the most HECM volume in the U.S., growth in regions like the Northwest and Rocky Mountain areas are reassuring.

“It’s always good to see new markets grow and pick up some of the slack, especially in years like this,” Lunde said.

Written by Jason Oliva