Barring figures from February of 2019 when Home Equity Conversion Mortgage (HECM) endorsements shot up due to a correction after the 2018-19 partial federal government shutdown, October 2019 was the strongest month for HECM endorsements since May 2018, attributed to a favorable interest rate environment. This is according to new HECM analytics data compiled by New View Advisors.
However, now that interest rate reductions have slowed down, it’s not yet known how numbers in the months to come will be affected, says New View.
“Other than in February 2019, when the market recovered from the year-end slowdown and reached over 4,000 endorsements, October’s endorsement count is the strongest since May 2018,” New View writes in its accompanying commentary. “Part of the increase in volume can be attributed to lower interest rates. Now that interest rate declines have stalled, it remains to be seen if higher endorsement volume will continue.”
A new release in New View’s “Who Buys What From Whom” (WBWFW) report for October 2019 was also released, showing that 63% of total origination and securitization volume was sold from originators to issuers of HECM-backed Securities (HMBS) over the last 12 months.
“Only 37% was originated and securitized by the same company. Of those loans that exchanged hands, 70% were sold by the top 100 sellers, and 20% were sold by the top 2 sellers,” New View says. “The total trade volume from the Top 100 list took a dip in September, with $98 million HECMs originated, sold, and securitized, the lowest total in the last 12 months. August was the high water mark, with over $178 million HECMs originated, sold, and securitized.”
The WBWFW report aims to provide additional insight into the HECM marketplace by offering a look at which HMBS issuers buy HECM loans from which lenders. The report compiles publicly available Government National Mortgage Association (GNMA, or “Ginnie Mae”) data showing which HMBS issuers buy HECMs from which lenders, or “Who Buys What From Whom.”
Endorsement data can be a lagging indicator of reverse mortgage market health, according to New View Advisors Partner Michael McCully to RMD in an October interview. The reason for that is because there can be a delay between the time a loan is closed and endorsed.
However endorsement data is still a valuable metric, McCully says, and it remains to be seen if the United States Congress will resolve budget differences ahead of a December vote on the matter. If left unresolved, an impasse between the House, Senate and White House could result in another partial federal government shutdown at the same time that the 2018-19 shutdown occurred.
Read the full HECM Endorsement Analytics report from October 2019, which includes WBWFW information, at New View Advisors.