Volume was up all across the nation with the exception of New England dropping -8.8%. Rocky Mountain (28.2%) and Pacific/Hawaii (24.9%) fared particularly well, leading 6 of the 10 regions to double digit percentage growth. Rocky Mountain was also the only region to increase from January 2011, up 1.6% while the industry overall dropped -19.9%.

• Salt Lake City grew 50.7% from last January, powering the Rocky Mountain region totals
• Caribbean, which includes Puerto Rico, grew 26.9%

Among lenders, we saw 6 of the top 8 active lenders increase volume and 4 of those by double digit percentages:

• Security One led the way with a 27.9% increase
• Genworth saw a 26.1% increase
• Both companies posted their highest monthly total on record, although these numbers do include TPO business that wasn’t counted in historical numbers before 2011
• American Advisors (23.4%) and Generation Mortgage (17.2%) rounded out our double digit percentage growers for the month

Active lenders dropped significantly from last year, but that is almost entirely the result of FHA’s move to stop approving brokers which results in those companies not being counted in this total.

Click on the image below for this month’s report.

One of the questions we hear a lot is whether having more lenders is good or bad for the industry. Of course, most people dodge by saying that more of the right type of lenders is a good thing, which is much easier to agree with.

We can’t prove that more or fewer lenders is the better way to go, but one thing is becoming evident over time. Whichever comes first, lower active lender totals march in lock-step with lower loan volumes.

It’s no secret that endorsements have been lower the past few years, nor that there are fewer lenders actively originating HECMs. What’s striking about the chart is just how correlated the two trends have been. The endorsements figures are easy enough to find (any of our 3 monthly reports). You can find the active lenders count including TPO (red line in chart) in the top left box on page 2 of HECM Trends each month, and the FHA approved HECM lenders (blue line) in our HECM Lenders reports.

It’s also worth pointing out that as FHA switched from approved brokers to TPOs approved by lenders (gap between red and blue lines on chart), HECM volumes stayed in line with the red line that includes TPOs. This would suggest that the active originators metric including TPOs is more representative of the health of the industry.

Click on the image below to view the full HECM Trends report for this month.

October gave us reason to doubt that expectation, with the first half of Wells volume decline coinciding with a larger drop in wholesale/TPO volume than retail/direct. November brought us full circle as the second half of Wells volume decline saw wholesale/TPO rise to the challenge of replacing the former market leader.

Total endorsements were virtually unchanged in November, but wholesale/TPO grew 22.7% while Retail/direct dropped -11.8%. This stunning disparity brought wholesale/TPO share of the total market to the highest level in over a year at 42.5%.

From a lender perspective, there was plenty to cheer about on the leaderboard, as all but 2 of the 8 largest active lenders (ex Wells & BofA) showed gains in the month, with One Reverse and Security One being the only decliners. Metlife and Genworth both saw volume rise by triple digits.

November also saw big volume increases for some lenders outside the top 10, as Money House, iReverse and Cherry Creek all saw increases over 100% from October. Be sure to check page 4 to see where your company placed among the top 100 originators in November!

Click the image below to access the full report:

December finished on a modest down note, with HECM endorsements down -0.4% from November to 4,636. Active lenders increased 4.4%, although this measure of competition remains at a low level since stabilizing earlier this year.

We’ve been saying that fewer competitors yields benefits for surviving lenders for at least a year, and Metlife provided a poignant demonstration of this effect. The company’s November and December totals were its two highest endorsement figures of the year, with each month higher than the low months for Wells Fargo before their exit announcement in June.

Of the 10 regions we track, 5 were up including the 2 largest, Southeast/Caribbean and Pacific/Hawaii. And in a year when national volume fell -5.6%, it’s worth noting the winners among our market rankings:

• Jackson, MS took top growth honors, finishing up 41.3% from last year. Honorable mentions go to booming metropolis Casper, WY, up 39.4%, and Shreveport, LA, up 29.8%
• New York rose to the top market in the country with 3,133 loans, up 1.2% from 2010. The big apple swapped spots with Los Angeles, which dropped -10.7% to 2,960.

We’ve previously written about Baltimore, New Orleans, Philadelphia, and North Carolina, but as the housing bust has progressed there have been fewer growth stories to find. Saint George caught our eye as it rose to the top of our listing of cities by MCA growth on page 2 (bottom), finally taking the crown from Philadelphia.

Our first guess was that this might be another refinance driven surge as we saw in Baltimore and Philadelphia, but there hasn’t been a single HECM to HECM refinance yet in 2011 for the city. That of course got us even more curious, so we started looking at lenders – and hit the jackpot.

Cherry Creek Mortgage has created substantial business in Saint George as a new industry participant, in a place where the rest of the industry put together is essentially following the national volume trend. There are lots of ways to interpret the company’s success, and we won’t pretend to know their secret sauce. But we’ll hazard a couple of thoughts:

• Small, under-penetrated industries like ours still have niche opportunities that have not been fully understood nor harnessed by existing competitors
• Single companies with an innovative approach to the customer, product and/or market can change the shape of the industry in a city, state or even nationally
• Our industry is well served by new competitors that thoughtfully pursue new strategies

Congrats to Dan and the rest of the team on an amazing success story.

Click on the image below to view the full HECM Trends report for this month.

Now that we have details available to report, it’s perhaps even more interesting that the broker/wholesale channel still declined faster than retail/direct, even though Wells Fargo’s decline was almost entirely felt on the retail side (Wells was 93% retail). Wholesale declined -18.3% vs. -16.1% for Retail, marking the fifth consecutive month of under-performance.

It’s logical then, to assume that other retail lenders did better in October than brokers in aggregate, and page 4 of our report makes it clear how each of the top 100 fared (although the list doesn’t distinguish retail lenders vs. brokers). A few notables:

• American Advisors Group (#4) was up 49.3% in the month (and 132.5% year to date) – Retail
• New Day Financial (#11) was up 34% – Retail
• Great Oak Lending (#17) was up 34.8% – Retail
• Open Mortgage (#23) was up 25% – Broker

Click the image below to access the full report:

This month the other lenders entirely picked up the slack, suggesting that our initial guess that half of Wells’ volume might migrate to other lenders (rather than disappearing completely) could play out after all. Part of that offset came from an additional 14 lenders showing up in the rankings compared to October (5.9% increase) who contributed 59 loans after netting out the October lenders that fell out in November.

The headline story of the month is undoubtedly the industry taking the Wells decline in stride, and the disparate lender performances are mirrored in the geographic perspective. Several regions saw significant changes from last month:

• On the downside, Northwest/Alaska, Pacific/Hawaii and Midwest all saw double digit percentage declines of -24.1%, -14.5% and -12.4%, respectively
• Rocky Mountain bounced back up 50% from a dramatic drop in October
• Southwest and New York/New Jersey also put in good performances, up 19.1% and 10.5%

Click on the image below for this month’s report.

A big part of that story can be found in applications per business day, which since April have been trending down compared to last year.

When comparing applications to endorsements (and ignoring the distortion from last September’s application rush ahead of PL reductions), we should expect a continued decline in endorsements year over year given the pattern of applications thus far.

Against this national trend lower, we continue to see some states and cities buck the trend:

• North Carolina continues to perform well, while New Jersey, New York and Texas are all up modestly year to date
• Among counties, Philadelphia, Nassau and Suffolk in NY, and San Diego and Orange in CA are all benefiting this year
• Philadelpia, San Antonio and San Diego are all up double digits among cities from last year

Click on the image below to view the full HECM Trends report for this month.

September overall endorsements were down -3.8%, but TPO/wholesale (-6.1%) fared worse than retail/direct (-2.5%) for the 4th straight month. That string is certain to be broken next month given the big impact of Wells Fargo’s decline, but it does suggest sustained weakness in the TPO model for reverse mortgages. The regulatory changes seem the most likely culprit for the change, whether this was the intended consequence or not.

The full list of HECM Originators (including TPOs) can be found on pages 3 and 4. Page 3 ranks the top 100 originators in the past twelve months, and page 4 ranks the top 100 originators for the month of September. If a company endorsed more than 6 loans in September or 73 loans in the past 12 months and you can’t find them on this, please let us know. We’re still sorting through some of the names that are slightly different as a TPO compared to their FHA approved name, and we want to make sure we rank everyone appropriately.

Click the image below to access the full report:

HECM endorsements for October were down -16.8% to 4,653, the lowest total since the industry bottomed out in May 2010 from the first principal limit reductions. Wells Fargo wasn’t totally absent from October’s endorsements, with 787 loans still good for second place behind Metlife, but that’s probably more bad news than good.

We’re almost sure to break last year’s bottom next month as Wells volume declines further, and if other lenders can’t pick up some of the loans Wells isn’t doing, we could be looking all the way back to July 2005 for the last time monthly endorsements were under 4,000.

What is more surprising than the Wells decline, which has been expected, is the relative weakness of several other lenders in the month. Metlife, Urban, Generation, and Security One all declined in October. The aggregate decline of these 5 lenders is slightly larger than the total industry decline, while One Reverse, Genworth, AAG and Reverse Mortgage USA helped stem the tide.

These numbers include TPO business under the new HUD system, so we’ll have a better read for retail/broker/TPO trends next month when we can dissect further in our HECM Originators report. For now, we can simply observe that so far, the industry does not seem to be making up for the branch distribution network losses of BofA and Wells.

Click on the image below for this month’s report.