ReverseIQ Newsletters

Long View – HECM Trends May 2014

July 29, 2014

May’s HECM endorsement volume was down -15.6% from 2013 but up 1.5% from 2012. It’s tempting to say that 2014 will come in near 2012 totals, but the downside scenario is closer to 2005.

  • Jan – May cumulative volume is down -12.6% from last year and -2% from 2012
  • 2012 finished with 52,883 endorsements, which means we need to average 4,240 endorsements per month for Jul-Dec to match it and that’s just about the average of May/Jun

We haven’t put out an update on this chart in a while, but it really tells a lot of the story for the industry changes and struggles using case numbers issued as our general measure.

HECMCasesIssued

The tempting conclusion to draw here is that FHA program changes (orange arrows) are the major driver of volatility – and on a short term basis that would be true. What gets a bit lost in this monthly perspective is the medium/long term ceiling being lowered by the lender exits (red arrows) as the industry loses distribution.

Check out how trends are shaking out in your state/county/city/zip in the full report below (click on the image) or feel free to give us a shout if you’d like a personal deep dive to see how this information can focus your opportunities.

HECM Trends

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HECM Originators May 2014

July 23, 2014

HECM endorsements rose 7.8% in May, but the big winners were retail lenders with volume up 12.2% compared to just a 2% rise for broker/wholesale volume. Retail is at 59% of industry volume, just short of the 61% reached in September and December last year.

  • American Advisors Group continues to impress with a new high of 1,481 loans, up 17.7% from April
  • RMS/Security One bounced back with a 24.8% rise to 392 loans and fourth place
  • Proficio rose 23.3% to recover some of the losses from the past three months

Don’t forget to check out the rankings on page 3 (trailing twelve months with channel splits) and page 4 (single month retail only). If your company is not an FHA approved lender, these are the only industry rankings where you’ll appear!

Click the image below to access the full report.

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Two Steps Back – HECM Lenders June 2014

July 6, 2014

We’d like to blame our business trip to the East Coast for our delay in getting this newsletter sent out, but in reality we’re still grieving over the US national team’s defeat in the World Cup despite a valiant defensive effort. Getting out of a brutal group stage was a big win, but it still hurt to get sent home by a tough Belgian team that played a great game. So close and yet so far – onward to Russia 2018! Now back to our regularly scheduled programming…

HECM endorsements dropped -12.7% in June from May, to 3,927 loans. That’s the lowest monthly total in 18 months (3,912 loans in Dec 2012) and there’s a distinct possibility in the next few months we could go below the trough from that era of 3,706 loans set in September 2012. If that were to happen, we’d be back at levels not seen since 2005.

The good news is that FHA just raised the principal limit factors for most older borrowers at present interest rates, which would allow more cash for most borrowers in the market today. That gives back a small piece of the reductions in principal limits that have played an outsize role in shrinking industry volume over the past 6 years.

The bad news is that FHA at the same time reduced the principal limit factors for borrowers as 10 year interest rates rise, so reverse mortgages are less of a business hedge against reduced forward mortgage refinance volumes in the same scenario.

Bottom line is that industry growth is going to be linked to penetrating the home purchase market much more extensively than at present, changing the perception of reverse mortgages to a financial planning tool and bringing private capital back to offer proprietary products. Given how low the industry bar is set right now succeeding at any one of those could double current volumes in the next few years very easily, but pursuing all three strikes us as the most rational approach.

Click the image below for the full report.

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