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.

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.

October gave us reason to doubt that expectation, with the first half of Wells volume decline coinciding with a larger drop in wholesale/TPO volume than retail/direct. November brought us full circle as the second half of Wells volume decline saw wholesale/TPO rise to the challenge of replacing the former market leader.

Total endorsements were virtually unchanged in November, but wholesale/TPO grew 22.7% while Retail/direct dropped -11.8%. This stunning disparity brought wholesale/TPO share of the total market to the highest level in over a year at 42.5%.

From a lender perspective, there was plenty to cheer about on the leaderboard, as all but 2 of the 8 largest active lenders (ex Wells & BofA) showed gains in the month, with One Reverse and Security One being the only decliners. Metlife and Genworth both saw volume rise by triple digits.

November also saw big volume increases for some lenders outside the top 10, as Money House, iReverse and Cherry Creek all saw increases over 100% from October. Be sure to check page 4 to see where your company placed among the top 100 originators in November!

Click the image below to access the full report:

December finished on a modest down note, with HECM endorsements down -0.4% from November to 4,636. Active lenders increased 4.4%, although this measure of competition remains at a low level since stabilizing earlier this year.

We’ve been saying that fewer competitors yields benefits for surviving lenders for at least a year, and Metlife provided a poignant demonstration of this effect. The company’s November and December totals were its two highest endorsement figures of the year, with each month higher than the low months for Wells Fargo before their exit announcement in June.

Of the 10 regions we track, 5 were up including the 2 largest, Southeast/Caribbean and Pacific/Hawaii. And in a year when national volume fell -5.6%, it’s worth noting the winners among our market rankings:

• Jackson, MS took top growth honors, finishing up 41.3% from last year. Honorable mentions go to booming metropolis Casper, WY, up 39.4%, and Shreveport, LA, up 29.8%
• New York rose to the top market in the country with 3,133 loans, up 1.2% from 2010. The big apple swapped spots with Los Angeles, which dropped -10.7% to 2,960.

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.

Now that we have details available to report, it’s perhaps even more interesting that the broker/wholesale channel still declined faster than retail/direct, even though Wells Fargo’s decline was almost entirely felt on the retail side (Wells was 93% retail). Wholesale declined -18.3% vs. -16.1% for Retail, marking the fifth consecutive month of under-performance.

It’s logical then, to assume that other retail lenders did better in October than brokers in aggregate, and page 4 of our report makes it clear how each of the top 100 fared (although the list doesn’t distinguish retail lenders vs. brokers). A few notables:

• American Advisors Group (#4) was up 49.3% in the month (and 132.5% year to date) – Retail
• New Day Financial (#11) was up 34% – Retail
• Great Oak Lending (#17) was up 34.8% – Retail
• Open Mortgage (#23) was up 25% – Broker

Click the image below to access the full 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 looked at endorsement volumes from October 2010 through March 2011 (the last 2 quarters where Wells, BofA and FF were fully represented) to see how much market share the three collectively had by state. Top 10 states by total volume and national total are in the table below, displaying endorsements and market share from the three exiting lenders.

The results were logical, but surprising for their size. With California continuing to have the most HECM volume, the fact that exiting lenders held almost 50% market share means a huge amount of volume is potentially available. Also among the top 10 states, NC and NJ were above 50% market share.

It’s a huge opportunity for the remaining lenders and one that hasn’t been lost as the aggressive push to hire loan officers from these companies has mostly abated. That’s certainly the most straight-forward strategy, but there is likely to be significant volume still up for grabs in several of these states for those that know where to look.

From an industry perspective, it also means we should expect some of these states (especially NC) to have volumes decline more due to these market share concentrations. The combination of restrictive regulations and large market share for departing lenders means big opportunity for lenders that can do business in NC, but also adds up to opportunity lost for consumers and the industry if there aren’t enough lenders available to serve that 62%.

If you’ll be in Boston for NRMLA’s Annual Convention, don’t miss the HECM by the Numbers panel. We’ll be speaking more on this topic and Purchase/Saver opportunities, currently scheduled for Monday, Oct 24 @ 1 pm.

Click on the image below to view the full HECM Trends report for this month.

While we continue to trend lower than last year on the volume side for the third straight month, what’s starting to emerge from the monthly numbers is the sense of clear winners from the exit of BofA (Wells hasn’t really affected these numbers yet). On the list of winners, Metlife, Genworth and Security One come out near the top given their dramatic jumps since the first quarter.

Regionally, 7 of the 10 regions increased in September in contrast to the overall down month nationally. As we commented upon previously, the highest volume markets lagged: the bottom 6 regions increased 118 units while the top 4 dropped 335, even after accounting for a small increase in Pacific/Hawaii.

• Northwest/Alaska had the largest unit volume increase, up 33 units or 12.0%
• Rocky Mountain had a slightly higher percentage increase, up 12.6% or 29 units

Click on the image below for this month’s report.

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.