Posts Tagged ‘Generation Mortgage’
We suggested in last month’s report that we expect endorsement volumes to get worse before they get better, and May certainly proved that point. It would have been more fun to be wrong in this case: May volume came in at just 4,554 loans, down 17% from April and the lowest monthly volume since September 2005.
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!
There’s a new sheriff in town, and that sheriff is Generation Mortgage. Ok, that may be a little extreme, but on an endorsement volume basis we saw Generation take the lead on the wholesale side of the business in February, with 831 loans endorsed during the month. This is a major improvement over where they were in the second half of 2009, where they were a little late in getting a competitive fixed rate product to market. With over 70% of the reverse mortgage business being fixed rate product in the latter portion of the year, not having it proved costly. However, it appears they have fixed that, and in a big way. However, before we anoint them as the new kings of the wholesale biz, it’s worth a wait of a few months to see if the performance is consistently good, or if there was some catching up in endorsements from prior periods.
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:
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.
