In any other circumstance, we wouldn’t be bidding a fond farewell to 2009 since it was the first decline in overall industry volume in recent memory. However, in light of what is shaping up to be a significantly tougher 2010, we’re almost nostalgic about the year just ended.
Here’s an update on our running application trend chart to illustrate what we’re looking at for 2010 omens. The only thing that could be more disturbing than the slow recovery we saw in November and December is the double dip back down in January. Apps were all the way back down to 5,805, below even October’s reading of 5,892.
If you’re looking for good news, we are finally hearing optimistic anecdotes from many of our clients about activity levels picking back up in February. Of course, we’re also hearing a lot of examples of small reverse brokers who are opting out of the new licensing tests and either fleeing the industry entirely as the volume declines or joining up with larger firms where licensing (and corporate profitability) is someone else’s problem. And of course, there are plenty of federal bank subsidiaries out there that are marketing their exclusion from individual loan officer licensing pretty heavily these days…
Connecting the dots, we can see from this month’s report that the number of lenders dropped 11% in December. We suspect that many of those that are jumping out of the business are likely in areas like San Bernardino/Riverside/Fresno in California, Las Vegas, NV and Miami, FL where penetration is highest and home price declines have been most severe, as areas with these characteristics continue to see steep declines in loan volumes.
?Penetration Rank by Geographic Area
Rank State Penetration Rank City State Penetration
1 DC 7.3 % 1 Opa Locka FL 17.0 %
2 NV 3.9 % 2 Compton CA 14.1 %
3 CA 3.8 % 3 Hialeah FL 12.0 %
4 MD 3.7 % 4 Apple Valley CA 8.9 %
5 UT 3.7 % 5 Hesperia CA 8.9 %
6 OR 3.4 % 6 Sun City CA 8.7 %
7 CO 3.3 % 7 Moreno Valley CA 8.4 %
8 FL 3.2 % 8 Portsmouth VA 8.1 %
9 CT 3.0 % 9 Detroit MI 8.0 %
10 AZ 2.9 % 10 Miami FL 7.9 %
Take a look at the flip side of this trend though, and we can see that many of the higher value urban areas are seeing large increases in activity as the loan limit increases continue to work their way through. Lenders that want to survive are learning to adapt to where the business is today, getting much more local than ever before.
Of course, if you’ve been reading this report for a while you already know all this. For our new readers, you can find these facts on page 2 of the report below and plenty more food for thought as well.
Click the image below for this month’s Industry Trends report.
As we offer up the last of our 2009 Wholesale Leaders report, it is perhaps fitting that in the year of “too big to fail” we ended with yet another counter-trend uptick in broker/wholesale volume. December saw broker/wholesale volume grow 10.9% from November, compared to a 3.1% growth for direct lender’s “retail” volume.
Despite continuing (and maybe growing) advantages for large financial institutions during the year, we’ve seen broker/wholesale reverse mortgage loan volume outpace direct lender “retail” activity in all but 1 month (March). Sure, broker/wholesale volume started the year with an advantage here given that it comprised 55% of 2008 loans, but 2009 remains a very respectable showing regardless.
The disparity introduced by the early availability of fixed rate product through broker channels is at least partially responsible, but perhaps the demise of brokers has been oversold? Time will tell (and we’ll keep you posted through these reports), but at least in the first round of our new world financial order, the brokers have survived to see another year.
A few other highlights from the full report:
- Broker/wholesale volume comprised 52.7% of all 2009 loans, down from 55.1% in 2008
- All four of the largest wholesale lenders in 2008 (Financial Freedom, JB Nutter, Bank of America and World Alliance Financial) saw broker volumes decline in 2009, as the industry broadened to include both more wholesale lenders and a more even distribution of volume amongst them
- Notable wholesale winners in 2009 include:
- Metlife – up 156% to finish a close 2nd for the year to longtime leader Financial Freedom
- Generation – up 209% to finish 5th
- Genworth – up 242% to finish 6th
- Urban Financial – up 170% to finish 7th
- It’s a testament to just how large a lead Financial Freedom’s wholesale business enjoyed to see them still come in number 1 after 2 consecutive years of over 40% declines in volume.
Click the image below for the full report.
The retail endorsement numbers for the January 2010 are now available. Endorsement volume came in at 7,629 units for the month, an 8% drop from December 09, and a decline of 22.6% from January of last year. We have to go all the way back to October 2006 to see a lower endorsement number.
Some highlights for the month:
- The number of active lenders decreased to 1,017 in the January period. This is a drop of almost 19% vs January 2009, almost even with the volume decline and easing the hit to lenders from lower volume.
- Another strong indication that lower volume is affecting competition as we saw only 43 new lenders in January. Again, we have to go back three years to see a value lower than this.
- All HUD regions experienced volume declines compared to last January. Leading the way on the negative side were the Rocky Mountain, Great Plains, and Southwest regions. In the “Still down, but not so much” camp, we have the New York/New Jersey, Mid-Atlantic, and Southwest regions.
- When we get to the field office level, we finally see some areas of strength. San Francisco, Baltimore, Houston, New Orleans, Birmingham, Columbus, Spokane, Nashville, Shreveport, Grand Rapids, and Sioux Falls were the only 11 field offices that experienced higher volume vs Jan 09.
Click on the image below for this month’s Retail Leaders report:
