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Major Lenders Buck April Endorsement Dive With Big Gains

Home Equity Conversion Mortgage (HECM) endorsements fell by 45% in the month of April 2020, for a total of 1,597 loans according to the latest HECM Originators report from Reverse Market Insight (RMI). The fall was led by the wholesale endorsement segment of business, which experienced a decrease of 47.8% that month, while retail levels recorded a smaller — though still substantial — decrease of 42%.

Seven of the top 10 lenders performed better than the majority of the industry by posting volume growth, according to the data. The increases were led by Open Mortgage, posting a 49% increase in total volume led by an 83.4% increase in its retail volume and a 20.7% increase in its wholesale volume. Also performing well was Fairway Independent Mortgage Corporation, which only offers loans on a retail basis but nonetheless posted a month-over-month increase of 47.9%.

The growth leaders were followed by Longbridge Financial with an increase of 22%, Liberty Reverse Mortgage with a rise of 16.1%, Synergy One Lending/Mutual of Omaha Mortgage with an increase of 12.8%, along with Reverse Mortgage Funding (RMF) and American Advisors Group (AAG) each posting growth in the single digits.

As noted in previously-released data, April reverse mortgage endorsements noted a sharp, significant drop amid the general economic turmoil stemming from the COVID-19 coronavirus pandemic. While the data noted a sharp month-over-month decline, industry analysts at both RMI and New View Advisors along with leadership at some lenders separately advised RMD that the data did not tell the full story of the health of the reverse mortgage business.

“We already know that April HECM endorsements dropped off a cliff and recovered in May, which strongly suggested that April’s volume had a lot of other factors than a drop in HECM lending behind the decline,” writes John Lunde, president of RMI in the commentary accompanying the latest HECM Originators report.

May data revealed endorsement tallies that had shown their best performance in over two years, surging 215% to a total of over 5,000 loans.

Lunde attributed much of this to a backlog, but does see at least a possibility of an impending “new normal.” Still, it may take a little longer to fully understand the impact that the COVID-19 pandemic will have on HECM endorsements, he said. A fuller picture may emerge of May’s performance once the divide between retail and wholesale endorsements becomes clearer.

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.