Posts Tagged ‘HECM zip codes’
We’re getting closer and closer to the final reports of 2011, so we’ll preface next month’s numbers by showing one of the biggest trends of the past 3 years: Lender consolidation.
One of the questions we hear a lot is whether having more lenders is good or bad for the industry. Of course, most people dodge by saying that more of the right type of lenders is a good thing, which is much easier to agree with.
We can’t prove that more or fewer lenders is the better way to go, but one thing is becoming evident over time. Whichever comes first, lower active lender totals march in lock-step with lower loan volumes.
It’s no secret that endorsements have been lower the past few years, nor that there are fewer lenders actively originating HECMs. What’s striking about the chart is just how correlated the two trends have been. The endorsements figures are easy enough to find (any of our 3 monthly reports). You can find the active lenders count including TPO (red line in chart) in the top left box on page 2 of HECM Trends each month, and the FHA approved HECM lenders (blue line) in our HECM Lenders reports.
It’s also worth pointing out that as FHA switched from approved brokers to TPOs approved by lenders (gap between red and blue lines on chart), HECM volumes stayed in line with the red line that includes TPOs. This would suggest that the active originators metric including TPOs is more representative of the health of the industry.
Click on the image below to view the full HECM Trends report for this month.
It’s been a while since we wrote about a hot HECM market bucking the national downtrend, but this month we have a very interesting one for you. As you might have guessed by the title of this report, we’re talking about Saint George, Utah. The city has more than doubled total Max Claim dollars year to date, and at 100 loans with two more months to go is on track to easily surpass its prior loans record of 104, set in 2007.
We’ve previously written about Baltimore, New Orleans, Philadelphia, and North Carolina, but as the housing bust has progressed there have been fewer growth stories to find. Saint George caught our eye as it rose to the top of our listing of cities by MCA growth on page 2 (bottom), finally taking the crown from Philadelphia.
Our first guess was that this might be another refinance driven surge as we saw in Baltimore and Philadelphia, but there hasn’t been a single HECM to HECM refinance yet in 2011 for the city. That of course got us even more curious, so we started looking at lenders – and hit the jackpot.
Cherry Creek Mortgage has created substantial business in Saint George as a new industry participant, in a place where the rest of the industry put together is essentially following the national volume trend. There are lots of ways to interpret the company’s success, and we won’t pretend to know their secret sauce. But we’ll hazard a couple of thoughts:
- Small, under-penetrated industries like ours still have niche opportunities that have not been fully understood nor harnessed by existing competitors
- Single companies with an innovative approach to the customer, product and/or market can change the shape of the industry in a city, state or even nationally
- Our industry is well served by new competitors that thoughtfully pursue new strategies
Congrats to Dan and the rest of the team on an amazing success story.
Click on the image below to view the full HECM Trends report for this month.
HECM endorsements were down -3.8% in September, and TPO/Wholesale fared worse than Retail/direct volumes. If we put that together with what we already know about Wells and BofA exiting and where theirvolumes are by state, what can we expect in the next few months?
A big part of that story can be found in applications per business day, which since April have been trending down compared to last year.
When comparing applications to endorsements (and ignoring the distortion from last September’s application rush ahead of PL reductions), we should expect a continued decline in endorsements year over year given the pattern of applications thus far.
Against this national trend lower, we continue to see some states and cities buck the trend:
- North Carolina continues to perform well, while New Jersey, New York and Texas are all up modestly year to date
- Among counties, Philadelphia, Nassau and Suffolk in NY, and San Diego and Orange in CA are all benefiting this year
- Philadelpia, San Antonio and San Diego are all up double digits among cities from last year
Click on the image below to view the full HECM Trends report for this month.
