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Reverse Mortgage Endorsements Surge Nearly 60% in January

Home Equity Conversion Mortgage (HECM) endorsements increased by 59.2% to 3,919 loans for the month of January 2020, the highest level observed since February 2019, a month in which the data was artificially inflated due to the obscuring effects of a partial federal government shutdown that took place early last year. The majority of the top 10 lenders recorded endorsement increases, while all 10 tracked regions were up, as well. This is according to the January HECM Lenders report compiled by Reverse Market Insight (RMI).

Of all of the recorded regional activity, the Mid-Atlantic region saw the most notable increase due to its rise of 126.4% to 249 loans. New England exhibited the next largest increase, 91.9% to 142 loans, while the New York/New Jersey region rose 86.2% to finish with 229 loans.

Eight of the top 10 reverse mortgage lenders recorded volume increases in January, with the only exceptions being Synergy One Lending and HighTechLending, though each of those companies’ recorded drops were less than 10 loans each compared with November data. Liberty Home Equity Solutions, which recorded only 2 endorsements in December, caught up on what RMI President John Lunde calls an “obvious endorsement backlog” by recording 475 endorsements in January.

In terms of the source of such a solid month of overall industry activity, Lunde related that endorsements can sometimes be a generally tricky matter.

“I definitely think part of this is lumpiness we’ve always talked about with endorsements,” he said in an email to RMD. “Liberty in particular is an easy example here, with clearly depressed volume in December and potentially some months before that before blowing it out in January.”

Still, the relatively broad spike in activity could also be stemming from other attributes, such as seasoning, he said.

“[This activity] being so broad based on both lenders and geography makes me think there’s probably some catch up going on in general from seasonality,” Lunde said. “Folks were out in December and that depressed endorsements a bit, which then caught up in January. That’s pretty powerful when we have favorable rates underlying the whole time and strong origination activity from what GNMA data is telling us.”

Longbridge Financial tripled its endorsements, rising by 225% to finish with 117 loans in January, while Open Mortgage doubled its figure, rising 112.5% to settle at 187 loans for the month.

Read the HECM Lenders report at RMI.