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HMBS Growth May Signal Slow Reverse Mortgage Recovery

Another potential sign of recovery for the reverse mortgage industry, Home Equity Conversion Mortgage-backed securities issuance grew for the second month in a row, according to the latest data from analytics firm Baseline Reverse.

A total of $360 million in new production issuance was recorded in September, up from $340 million in August.

Four of the top five lenders all grew in production, with leader AAG taking more than 27.3% of the market share and producing $98.4 million in HMBS issuance. In August, the company issued $94.1 million. Finance of America Reverse followed with 19% market share, and a jump to $68.3 million of new production bonds in September from $47.3 million in August.

Baseline founder Dan Ribler told RMD said the dip after last year’s HECM rules changes is similar to the pattern after other rules changes, where production begins to slowly recover.

“Everybody takes a bit of time to tweak their marketing, makes some updates, and then it very slowly creeps back up,” he said.

Ribler that he doesn’t want to bet on what’s in store for October but he wouldn’t be surprised to see the uptick continuing.

“A lot of folks are looking at issuance totals and saying its the end of HECM as we know,” he said. “I continue to believe in it.”

Ribler noted in the report, “It’s still too early to tell if this is the start of a genuine recovery or if it’s just a blip; for now let’s just count the two consecutive months of improvement as a winning streak and continue to focus on helping seniors.”

This growth joins the recent HECM endorsement increases reported by Reverse Market Insight.

“Volume is creeping up, which is what I’d expect in the next several months,” RMI’s John Lunde told RMD. “I’d compare it to the recovery from Financial Assessment that took so long — which says as long as the demand is there for cash flow in retirement, the capability is there, and the product makes sense, then we’ll see continued volume.”

Written by Maggie Callahan