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Reverse Mortgage Volume Tanks 14% in May, Echoes 2014 Low-Point

Reverse mortgage volume continued its downward trend in May, plummeting to one of the lowest single-month endorsement totals in recent history, according to new industry data.

HECM endorsements fell 14.1% in May to 3,646 loans—the lowest monthly total since August 2014, when the industry struggled with the implementation of initial utilization restrictions, according to recent data released by Reverse Market Insight. In August 2014, HECM endorsements totaled 3,256 units.

May, which now represents the lowest month for volume recorded in 2016 thus far, follows several months of declining endorsements in both March and April. And further declines could likely be in store as the rest of the year unfolds.

“I think we’re going to struggle for volume in 2016, [considering] the fact that we’re almost in the middle of the year and haven’t seen a real pick-up from an application and volume perspective—we’ve seen a little bit, but it hasn’t been strong,” RMI President John Lunde told RMD.

Unanimous declines among the top-10 regions tracked by RMI dragged down May volume. The Great Plains, which reported 71 HECM endorsements during the month, saw its volume fall 37.2%, followed by the Rocky Mountain region, whose 210 loans represents a 34.5% monthly decrease.

All 10 of the regions in the country were down in May, however, several top lenders saw their volumes increase during the month, including Finance of America Reverse, which grew to 330 loans, signaling a 22.2% increase from last month when they had 270 loans endorsed.

High Tech Lending increased by 15.6% to 104 loans, compared to 90 loans in April. Reverse Mortgage Funding (RMF) and Synergy One also saw growth from April to May. RMF saw a 5% increase and Synergy One saw a 2% increase.

On the flip side, there were a few companies in the top 10 lenders group that reported significant drops in their endorsement volumes.

American Advisors Group endorsed 796 loans in May, a decline of 17.6% compared to 966 loans in April. Meanwhile, Liberty Home Equity Solutions reported 225 endorsements, down 49.6% from the previous month; and Reverse Mortgage Solutions/Security One Lending saw its volume fall 58.6% to 67 units, down from 162 units in April.

A year ago, reverse mortgage volume was on the upswing in March prior to the implementation of the Financial Assessment, but has fallen 108 loans short of March 2015 and just 88 loans shy of March 2014 levels, RMI noted in a HECM Trends report this week.

Industry endorsement volume is still recovering from the aftermath of the Financial Assessment. Given the lag time between endorsement and loan funding, the vast majority of the rule’s impact was not felt until the later half of 2015, leaving the industry with considerable ground to make up heading into 2016.

“We’re coming into the year underperforming,” Lunde said. “The industry is still finding its footing in some ways.”

Written by Alana Stramowski