There has been very little wholesale reporting in the reverse mortgage industry to date, but we’re doing our part to correct that situation with our new Wholesale Leaders report. If you’d like to see a monthly report that shows who the largest lenders really are when you add both Retail and Wholesale together, here’s your answer.
A few highlights:
- The first observation is found at the top of page 2 – Financial Freedom is still number 1, but followed closely by Bank of America, Wells Fargo and JB Nutter. Considering the staffing cuts at Financial Freedom from new ownership, and pullbacks by JB Nutter in wholesale, it looks likely that reverse will be dominated this year by two of the largest banks in the country.
- One Reverse Mortgage (QuickenLoans) is the Cinderella in retail, growing very fast after a brief post-acquisition pause. They’re almost entirely retail now after starting out as a more balanced retail/wholesale shop and had the third largest jump in loan volume, behind only Bank of America and World Alliance who were both starting from a much larger base.
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- Urban Financial is now 9th in wholesale and 5th in retail, for an overall ranking of 8th. They’re one of only two top 10 lenders with over 100% growth in the past twelve months, and they did it without the hefty acquisitions that powered BofA – Impressive.
- Wholesalers are proving there’s more than one way to skin a cat – or at least get reverse mortgage volume anyway. Financial Freedom did business with almost 1,600 brokers but captured just 39% of their business, whereas JB Nutter serviced 680 brokers and received 51% of their loans. There’s an amazing diversity of results on just this one metric for the wholesale business – check it out on page 2 at bottom left
As always, let us know if you have any questions or comments.
And look out for March Retail Leaders later this week…
We hope you’re all having a great start to spring and enjoying the fruits of higher HECM loan limits. As promised, we’re rolling out our second new publication this month, featuring comprehensive industry trends. If you’ve ever wondered where our industry has been most successful, there are two different ways to look at it in this report:
- On page 1, you’ll find state, county, city and even zip code top 10 lists by endorsement volume YTD. Where are you (and your competitors) generating loans? Now you know.
- On page 2, take a look at the tables for highest penetration by state and city. If you’re not in an educational or pioneering mood, it’s a pretty good bet that folks in these areas already know a few people who have reverse mortgages…
Chances are you’ve noticed your marketing and sales efforts are seeing significantly different results in some of these areas, so hopefully we’re shedding some light on things that have puzzled you. There’s a whole lot more in the report (even a heatmap of endorsement growth on the back page), so be sure to spend some time with it.
And even though this is more information than anyone’s ever put out on our industry before, we know there is a lot we couldn’t fit into three pages. If you have a question we haven’t answered or want to suggest a new idea, drop us a line.
Be on the lookout for our new Wholesale Leaders publication next week.
Until next time!
If you’re wondering exactly how the recently enacted legislation has affected the reverse industry, you’re not alone. More specifically, we’ve gotten a couple questions about how loan limits have affected average loan sizes and volumes in different markets around the country.
Last month, we talked a lot about loan unit volume and the large numbers of HECMs being refinanced. So let’s focus this month on how the loan sizes are being affected, in relation to volume. To do this effectively, we’ve split up the universe of loans into refis vs. new loans, since they can be dramatically different. We’ll look at the top three volume states, which conveniently enough, also offer a nice range of home values as well.
California
Aside from the volume being dramatically different for refinance vs. original HECM transactions, a couple of very interesting things stand out here:
- Refinance transaction values have stayed consistently higher than new HECMs, with home price declines showing up not in transaction values, but in volumes only
- Loan limit increases have brought refinance volumes back up considerably, but still below the peak volumes in 2006 and 2007
- While non-refinance transactions have experienced significant declines in both volume and values mirroring home prices, loan limit increases have led to a recent resurgence in values but not yet in volumes
One reasonable conclusion about California might be that aside from the current refinance surge, the reverse mortgage business won’t come back strong in the state until home prices recover or at least stop their dramatic slide.
Florida
Florida presents a different story despite its similar HECM volumes and housing crash poster state status:
- Unlike California, Florida’s non-refinance HECM volumes increased while values declined as home prices crashed, although volume in January was at its lowest level since December 2006
- Florida is seeing a much lower refi volume surge, perhaps because so many of the loans here are so much newer and haven’t seen dramatic price appreciation since the existing HECM loan
- Florida’s loan originators are also benefitting from the higher loan limits much more than California, given that a much higher percentage of California loans are already beyond the origination fee limits (only 12% of FL HECMs at or above $400K MCA in January, vs. 59% in CA)
At least so far, it appears that Florida’s reverse mortgage business is dramatically healthier than California, although the first cracks in the state’s impressive run are starting to appear.
Texas
As you might expect, Texas has a different story entirely from the first two states, but in a few surprising ways
- New HECM transactions in Texas have seen a 25% increase in average transaction value under the new loan limits, significantly greater than the approximate 15% increase in CA and FL. Better yet, originators in the state are benefitting dramatically from the new origination fee, with a higher minimum fee and virtually all of the higher loan values still low enough to fall under the cap and earn additional origination revenues.
- Texas is experiencing its first real HECM refinance wave and generated more refinance volume than Florida in January
- Both volume and value trends have gone slowly but steadily higher for new HECMs in Texas and while it’s not bigger than other states (despite the state motto), it’s certainly positive
All things considered, the reverse mortgage business in Texas looks healthier than either California or Florida, but the lower transaction values are likely to challenge new entrants to the state from higher value areas.
See something that’s caught your eye? Have a question we haven’t answered yet? Don’t be shy to send us your thoughts!
