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.

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.

We commented last month on the relatively narrow performance gap between retail/direct and broker/wholesale volumes as the changes from broker approval to TPO and lender compensation regulations worked its way through. This month the gap has opened back up, with retail/direct up 10.5% while broker/wholesale shrank -2.8%. We haven’t seen that large of a gap since February, as you can see from the table on page 1.

We’re not sure what’s causing the change, or even if it will continue, but we’ll be watching closely in the next few months.

Several lenders are seeing impressive growth in their businesses, with most of that coming on the retail side:

• American Advisors Group and Metlife have each grown retail more than 90% so far this year, while One Reverse, Generation and Genworth have all grown 20% or more
• Security One wholesale has grown 38.8% so far, while Urban is up 6.5% on a much larger base
• First National Bank of Layton has been steadily climbing the rankings this year, and reached the top 10 for the month of August with a 9th place ranking.

Click the image below to access the full report:

Last month we showed a chart that illustrated the impressive growth of TPO loans and the clear lead of a few sponsors in this channel. The updated chart shows continued growth as TPO loans made up 30% of all wholesale loans in April, and also the more competitive nature of the business as many sponsors raced to catch up.

Metlife ran out to a big lead in March but grew slower in April, while Urban, Genworth, Generation, BofA and Security One all grew significantly to more than double TPO business from 360 to 735 loans. We’re hoping in the future to analyze just how much TPO business is coming from originators new to the industry, but for now it’s clear that the sponsor side is becoming a much more competitive market.

This month’s report also raises a point in the discussion about industry consolidation, as the table on top of page 2 illustrates that some of the largest lenders declined much faster than the industry in April. We don’t put too much weight in any one month’s results, but it’s startling to see that 88% of the industry’s decline this month came from just 2 lenders: Wells Fargo and Metlife.

The 2 lenders were 44% of the industry in March, so their decline is far larger than their market share. The smallest originators didn’t catch a break though: top 10 lenders Urban and One Reverse both saw 12 month highs and Security One came in just one loan shy of their recent peak.

Click the image below to access the full report:

The potential offset to that trend is just starting to show up, as TPO originations by non-FHA approved originators (working through an approved sponsor) grew dramatically in March. The chart below shows this activity by sponsor for the first three months of 2011:

While this activity wasn’t enough to keep broker/wholesale endorsements from falling -0.7% in March to 2,785, much less keep up with direct/retail endorsements that grew 10.8%, the sheer growth from February is astounding. At the most pessimistic it should ease the declines in the broker/wholesale channel, and an optimist might hope for a rebound given the potential of credit unions and community banks.

From a lender perspective, we saw 4 of the top 10 lenders hit 12 month highs in the month as the industry set its own high water mark for the same period.

• Wells Fargo captured 31.9% of all loans through both retail and wholesale channels, well above their 12 month share average of 26.4%
• Generation was whisper close to breaking double digits in market share at 9.7%
• One Reverse continues to grow their direct lending business, up 22.2% in the past 12 months and showing a 5% market share
• Sun West is on the comeback trail and back in the top 10 this month for the first time since November

One housekeeping note this month: As we noted in our Retail Leaders newsletter last week, we are not yet able to track non-FHA approved TPO originators individually, so you’ll notice a row in our lender listing of “Unknown”. That’s a summary line for all loans in this category for now, until we can track these individually (we’re expecting a few months).

And if you’re in DC for NRMLA’s Policy Conference, we’ll see you at the cocktail reception!

Click the image below to access the full report:

Brokers still hold a slight edge in total volume over the retail channel, but the gap is closing each month and could easily flip the other direction at any time with how close we are now. Large lenders continue to dominate the volume totals, accounting for 88.9% of volume in April. This is up a minor amount from March, continuing above trend for past 12 months.

We’ve heard a lot about licensing and testing requirements at non-bank originators driving many loan officers to move to national banks to escape these burdens, but at least so far we haven’t seen it affect volumes in the industry.

• Of the top 10 lenders, only 3 have grown retail volume in the last 12 months and 2 of those are non-banks: Generation and One Reverse
• The strongest retail grower over the same period is Metlife (national bank), which continues to grow strongly in both retail and wholesale channels, up 82% and 102%, respectively
• Looking at the fastest growing retail/direct lenders, 4 of the top 5 are non-banks – New Day, Guardian First, and Cooper and Shein (in addition to One Reverse above)

It’s still very early to close the book on this, but at the very least the incremental benefits bank originators should see from licensing requirements is getting muddled among the many other factors affecting retail volumes.

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

For the second straight month there was an even greater decline in active lenders (down 23%) which has continued a nice upward trend in average loans per lender. The lower volumes certainly encourage consolidation and outright exits by smaller brokers/lenders, but it wouldn’t surprise us if there is also another major factor at work here in new regulations/licensing requirements causing small shops to preemptively exit the business or consolidate.

We’ve seen a few headlines on this already, and it makes perfect sense we’ll see a lot more – and a whole lot more that don’t make headlines but go quietly into the night nonetheless.

This month looks a lot like an uglier version of last month, but let’s dive in a bit to see what’s hiding below the surface:

• All 10 regions declined in May, led by Rocky Mountain (-37%) and Great Plains (-35%) while Northwest/Alaska (-2%) and New York/New Jersey (-6%) escaped relatively unscathed
• Of the 82 metros, only New Orleans managed an increase in volume (+1%), while Houston was basically unchanged with just one less loan endorsed
• The magnitude of change in the industry landscape is particularly apparent on page 2, where you can see just 3 of the top 10 lenders grew volume in May
  • Generation, Bank of America and Metlife each grew more than 10%, although all are still down significantly from their December volumes
  • Generation will be particularly interesting to watch in coming months to see if their recent proprietary product announcement has a ‘halo’ effect in raising their HECM volumes as well (we are also keen to see who will follow suit – just look at how fast the industry participants came up with $0 fee products). We won’t see proprietary volumes in this report, so check out our data repository if you want to learn more about how we’ll continue our comprehensive industry coverage as HECM’s market share slides below 99.9%
• Also on page 2, the charts for Active Lenders, Endorsements per Lender and New Lenders all tell the story that the number of competitors is shrinking dramatically as volumes decline and regulations increase.  By our count, just 25 lenders endorsed their first HECM in May!

The full report is available by clicking the image below.  Enjoy!

Genworth also gained in February with a more attractive fixed rate product offering to underline the point, although they saw less pickup than Generation.  Rounding out the trio of higher performers this month is Urban, recently bought by Knight Capital Group.  Their wholesale volume of 653 units put them in 3rd place for the month, behind Generation and Bank of America.

What are some other trends to point out for February?

• Wholesale endorsement volume dropped 12.6%, vs a 1.5% decline in Direct Endorsements.  One month does not a trend make, particularly since this still leaves broker/wholesale activity considerably above direct retail lending given the better figures in Dec & Jan, although we’ll continue to watch closely for signs of a trend given that the current environment seems tilted toward direct retail lenders right now.
• Another way to look at whether big lenders are faring better than small is the combined market share of top 10 lenders.  On that score, we’re getting early indications that the big are getting bigger as a full 92.5% of all volume in February went through either retail or wholesale channels at the top 10.  That may not surprise anyone who has been in the business a while, but it underlines the point that smaller volumes point to more concentration as smaller players exit the business.

• February proved a volatile month for lenders’ combined endorsement volumes, with 7 of the top 9 lenders (excluding WAF) having moves of 30% or more up/down.
  • Wells Fargo and Bank of America saw relatively steady volumes, up 11% and down 12% respectively
  • Generation, Urban and Genworth were the winners as outlined above, each up 36-88%
  • The remaining lenders saw declines ranging from 40-47%

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

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 volume dropped almost 17% from October, to 3,901 endorsements. This brings the YTD wholesale volume to 54,609 units, a 6.4% decline from 2008 levels, but we’ll still end the year with the second highest wholesale volume on record. Unfortunately, if the current application trends continue into 2010, there is a decent chance that wholesale volume could slip back to the levels of 2006 (which would mean wholesale volume around 40,000 units). Of course this is not something we all want to hear, but if you are not at least considering this possibility in your plans for 2010 and ready to take the appropriate actions, you may be in for a surprise, and not the pleasant kind.

As a wholesale lender, one way to buffer the potential drop in volume in the next year is to focus on your existing customers and do what you can to win more of their business. If you look at the table at the bottom of page 2, Wells Fargo is currently doing the best job of that (currently capturing 40% of their brokers’ volume), followed by Financial Freedom and Bank of America at 35%. Of course, that only tells part of the story, and the volume Wells does on the wholesale side should indicate that most of their clients are in the smaller volume group – Metlife, Bank of America, and Generation all have fewer customers with a lower capture rate, but do far larger amounts of volume in the wholesale market.

As a vendor to the reverse mortgage industry, the challenges and the opportunities are very similar to those the wholesale lenders face. Understanding which lenders you are missing out on and where they are doing business are both key to growing your market share. If a decline in volume is in the cards, the only way to keep above water is to win more business, both from your current customers as well as those you are completely missing. We have tools available to help you do just that – don’t hesitate to contact us if you want to learn more.

Click here or on the graphic below for this month’s report.