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Posts Tagged ‘Financial Freedom’

Reverse Mortgage Wholesale Leaders – May 2010

May’s volume was notable for being the lowest on record for 5 years, but the difference between broker/wholesale volume and retail/direct was just as stark. For the fourth consecutive month now, brokers bore the brunt of declining volumes, down -25.8% vs. an -8.4% decline for retail. If nothing else it shows the continuing impact of smaller originators getting washed out by lower industry volumes and new licensing requirements.

As we suspected in last month’s report, we did indeed see retail units surpass wholesale units in May, with 54% of volume coming from retail/direct originations. Given that the downtrend the past 6 months has unambiguously hurt broker/wholesale volume more than retail, we’ll be looking closely to see if the increased volume in June (and hopefully the next few months as well) continues to favor retail or swings back in favor of brokers.

So where are lenders placing their bets? One way to look at it is with the fastest growing lenders in both retail and wholesale:

Of the 5 fastest growing retail lenders, only one (Metlife) also has wholesale business, although they do happen to be the number 1 wholesaler
Of the 5 fastest growing wholesale lenders, all five have retail originations as well, although none has more than 23% of business from retail
Also of note, 2 of the largest wholesale lenders with the longest track record in the space, Bank of America and Financial Freedom, are flat and down -60% respectively in wholesale volume

In many ways today’s report illustrates what has long been considered a truism in the mortgage industry: wholesale is much faster to grow, but retail is where companies create lasting franchise value. We’re all in favor of a healthy industry with both retail and wholesale channels, but the trends right now are increasingly showing strain in the broker/wholesale side of the industry.

Be sure to click the link below to access the full report:

Wholesale Leaders – January 2010

Our first report of the new year and we have a new top wholesale lender to report. After an extended run of growth in the wholesale business assisted in no small part to being early in the fixed rate product, Metlife has risen to take the top volume spot among wholesale lenders. Bank of America also climbed into the number 2 spot, with longtime leader Financial Freedom slipping to 3rd. JB Nutter and Generation remained at numbers 4 and 5, respectively. Congrats to Mike Mooney and team! (full disclosure, they reinvested part of their earnings from growing the business in an add on the top lender ranking page in this report, but we promise it didn’t influence their rankings at all…)

For those keeping score, we continue to see a counter-intuitive theme in the marketplace as volume declines seem to be hurting the direct lenders (“Retail”) more than brokers so far. Direct lending (“Retail”) volumes were down almost 20% from December, compared with a 2.9% increase in broker business through wholesale lenders. We don’t expect brokers to swim against the tide of overall industry volume declines for long, but we’ll continue to watch these numbers as a quick indicator of the relative health of these business channels.

Of course, we’re dealing with endorsements here so there’s a possibility it could mean that broker loans are slower to get endorsed and the decline might show up later.

We’re excited to report that we’ll soon be able to look at additional data to answer questions like this, as we now have 3 of the top 5 lenders participating in the industry data repository. This puts our estimated coverage of reverse mortgage industry loans at over 40%, and we will start publishing reports talking about apps and fundings (instead of endorsements) once we have at least 5 of the top 10 and 50% coverage. If you’re interested in finding out how you can participate and what this means for the industry, check out our status page or contact us directly for more information.

A few other highlights from the full report:

Among the top 10 lenders, only 1 active company (excluding World Alliance, which is in runoff mode) had a volume increase from December: Generation Mortgage, which more than doubled. Much of this appears linked to a large increase in fixed rate volumes, but obviously Sherry and the team have been doing something right to see such a dramatic increase.
In case you’re wondering if the call center model works, One Reverse Mortgage continues to prove there are enough seniors comfortable completing a reverse transaction without a loan officer at the kitchen table to exclusively power a top 10 ranking. They grew their retail volume faster than all others (including Metlife and Bank of America) in the past 12 months, showing that there’s more than one definition of “distribution” for all of us to consider.

Click the image below for the full report.

Wholesale Leaders – December 2009

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.