Posts Tagged ‘HECM Applications’
Another month is in the books, and while volumes continue to be less than stellar, we’re getting a better picture of what the major lender exits portend for our future volumes. We can officially mark June as the month that BofA left the building from an endorsement perspective, given the decline from 896 retail endorsements in April to just 7 in June. We’ll dive into more detail next week, but perhaps as much as half of last month’s industry volume decline could reasonably be attributed to BofA. June could have been a 1,000 loan improvement from May absent BofA’s exit, but that’s only good for context.
We have another shoe dropping when it comes to analysis of these industry numbers given Wells Fargo’s 6/30 exit has yet to be baked in to any of the application or endorsement numbers we’ve seen yet, but we think the title of our post is appropriate given what the remaining lenders in our industry are experiencing.
Out of the 8 largest lenders not named BofA or Wells, just one declined in June. Looking at them collectively, these 8 lenders experienced a 37.9% increase in volumes from April to June, while the industry total declined -4.4% over that same period. Metlife appears at this point to be the biggest grower since the BofA exit, joining the 1,000 loan club this month for the first time.
Compared to the impact of HUD’s changes to the HECM program in October 2009, it’s very clear which had a larger impact on the industry. If anything, this highlights the importance of HUD’s pending news on financial assessment of borrowers and policy for T&I defaults.
Looking regionally, we saw improvement in all 10 regions tracked with Mid-Atlantic and Southwest seeing particularly strong growth from last month. From a year to date perspective, many areas continue to see growth:
- New York/New Jersey continues to ride the Q1 surge to show 15.9% growth from last year. Delaware and upstate New York have grown more than 25%, including both Albany and Buffalo.
- Great Plains, Southwest and Rocky Mountain are growing at double digit rates
- Midwest, New England and Northwest/Alaska are declining so far this year
- Detroit, Miami and Chicago have been the biggest decliners at the market level, all off by more than 25%
A bit of housekeeping: As HUD changes their data reporting in the wake of broker licensing changes, please note that brokers not closing loans in their own name are rolling off the active lender list over the next few months. As such, we will not be emphasizing active lender counts and changes until this stabilizes, likely toward year end. After that transition is complete, Retail Leaders will reflect the number of lenders closing HECMs in their own name. For a report including brokered loan activity attributed to the broker, please see our Wholesale Leaders reports.
Click on the image below for this month’s report.
Much like clouds, ink blots, and famous impressionist paintings, an observer can see pretty much any shape they want in the reverse industry these days. Saver is looking up, lender exits are looking down, and everything else seems in between.
A potential government shutdown has come and gone, and HUD still managed to post application volumes for March in a timely fashion! The application headline number is good news considering the 8.5% increase in applications, a second consecutive monthly increase.
Unfortunately, we don’t have to look far for negative impressions either. The increase was entirely due to more business days in March than February (24 vs. 21), so apps per business day actually declined 5.1%.
The outlook report also provides our monthly reading on HECM Saver endorsements, which were up 38.2% from February to 409, and represented more endorsements than refinance transactions (5.6% vs. 5.1%). Saver is continuing to grow at a steep rate after a slow start, and at this pace could be in double digits for market share later this year.
In looking to the Industry Trends pdf report linked at bottom, we can see that Pennsylvania stands out as the fastest growing among the top 10 states, up 27.2% vs. Jan-Feb 2010. There’s been a strong assist from Philadelphia, which has continued to grow since we profiled it last October.
In contrast with Baltimore, which is now declining fast as refinance activity dries up, Pennsylvania has always had a broad base to support industry growth: 5th largest number of senior homeowner households in the nation, and the lowest of the top 5 in penetration rate (% of these households with a reverse mortgage) as of December 2010.
Demographics isn’t always destiny, but it’s very useful to understand how our industry is tracking to its demographic potential. We put this type of demographic information alongside volume and loan size information together for easy reference in positioning your reverse mortgage business for success in our Market Opportunity Report. See a free sample on our website and subscribe today for quarterly updates.
Click on the image below to view the full Industry Trends report for this month.
We normally think of a ‘killer app’ as a perfect use that grows a new technology from curiosity to must have item. Just as email and search engines helped us all figure out what the internet could mean to our lives, so much that now we can’t imagine our lives without them and internet is considered a utility alongside electricity and water by most Americans.
One day our industry will find a ‘killer app’ for the reverse mortgage product that takes us from 2.24% market penetration (as of December 2010) to something much, much greater and a standard consideration in retirement planning.
But for this month, killer app meant just one thing when we saw the January application numbers: our industry is still struggling for volume. Before we get too gloomy it should be said that several clients have mentioned that February application volumes are surprisingly strong, but there is no doubt that January’s numbers took a step in the wrong direction.
January applications totaled just 7,396, down -10.6% from December but up 27.4% from a year ago. We’ve seen January applications decline each of the past 3 years as noted on the chart above.
Endorsements grew 6.8% from December to 6,904 (the highest total in a year) and were down just -1.7% from a year ago. We’re almost sure to see endorsement growth next month based on application trends recently, particularly as endorsement volumes really started falling off the cliff in March 2010 (-1,202 in March 2010 alone).
We also saw active lenders increase again in February at a slightly faster pace (9.9%) than endorsements.
In the market breakdown on pages 3-4, we noticed that a few of the hardest hit property markets are seeing HECM volume increases: Fresno +22.4%, Sacramento +8.5%, Tucson +14%. We’re not saying that all the bubble markets are back, as there are more markets still down like Miami (-50.1%) and Phoenix (-14.3%). All the same, it’s great to see some signs of life in these markets!
Click on the image below for this month’s report.
