Posts Tagged ‘HECM zip codes’
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.
This report has been re-named HECM Trends. Archived reports of the previous Industry Trends reports can still be found here.
Last month in this report we picked up on the theme of smaller states catching up with the historical bellwethers of the industry like California and Florida. This month, we’d like to focus more on the top 10 states, and in particular a top 10 state that used to be a much smaller state in terms of volume.
The state growth rates chart on page 1 caught our attention this month, as many states are showing growth from last year, but we can’t help remembering that it’s easier to bounce back after a down year than it is to sustain growth in the face of challenges such as the industry has seen these past few years.
While both Texas and North Carolina have shown positive growth since 2007, the latter is the only top ten state with a higher growth rate in 2011 compared to 2008, a peak year for many states. That would just be cocktail party fodder (just in time for NRMLA next month) if there wasn’t a good explanation behind each. But in this case, both have seen regulation (and regulatory changes) as a key driver behind their growth.
Texas has historically had very different home lending legislation than the rest of the states, so much so that reverse mortgage lending started there in 2001, a full 10 years or more beyond most other states. North Carolina has relatively restrictive lending laws, such that it limits the number of lenders in the state substantially.
The chart above is from our Market Opportunity Report (National) as of December 2007 and shows all states ranked vertically on penetration (% of all senior homeowner households with a reverse mortgage) and horizontally on Market size (households per active lender). You can see NC and TX as the two red dots toward the top middle/right of the chart, showing they were states where there were relatively few households with a reverse mortgage and relatively few lenders for how many households reside in each.
This chart is designed to illustrate opportunities for market growth for lenders, and has played out pretty well since then as we noted above. North Carolina in particular continues to be a good opportunity according to this chart, but if you can’t meet the licensing criteria there are other states poised for growth too. If you’re interested in seeing the updated report with the best growth candidates for next year, we’ll throw in a free look at the National report (showing all states) for any new subscribers to 1 or more states by the end of the month.
Housekeeping Notes:
- The Retail Leaders report has been re-named “HECM Lenders” to better identify it as the ranking of HECM Lenders closing loans under their own FHA approval. Lender volume presented on this report includes third party originations (TPO) of any company not FHA approved under their approved sponsor lender.
- The Wholesale Leaders report has been re-named “HECM Originators” to identify it as the best source of rankings of all companies originating HECM loans, regardless of FHA approval status
Click on the image below to view the full HECM Trends report for this month.
