Posts Tagged ‘JB Nutter’
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.
As we offer up the last of our 2009 Wholesale Leaders report, it is perhaps fitting that in the year of “too big to fail” we ended with yet another counter-trend uptick in broker/wholesale volume. December saw broker/wholesale volume grow 10.9% from November, compared to a 3.1% growth for direct lender’s “retail” volume.
Despite continuing (and maybe growing) advantages for large financial institutions during the year, we’ve seen broker/wholesale reverse mortgage loan volume outpace direct lender “retail” activity in all but 1 month (March). Sure, broker/wholesale volume started the year with an advantage here given that it comprised 55% of 2008 loans, but 2009 remains a very respectable showing regardless.
The disparity introduced by the early availability of fixed rate product through broker channels is at least partially responsible, but perhaps the demise of brokers has been oversold? Time will tell (and we’ll keep you posted through these reports), but at least in the first round of our new world financial order, the brokers have survived to see another year.
A few other highlights from the full report:
- Broker/wholesale volume comprised 52.7% of all 2009 loans, down from 55.1% in 2008
- All four of the largest wholesale lenders in 2008 (Financial Freedom, JB Nutter, Bank of America and World Alliance Financial) saw broker volumes decline in 2009, as the industry broadened to include both more wholesale lenders and a more even distribution of volume amongst them
- Notable wholesale winners in 2009 include:
- Metlife – up 156% to finish a close 2nd for the year to longtime leader Financial Freedom
- Generation – up 209% to finish 5th
- Genworth – up 242% to finish 6th
- Urban Financial – up 170% to finish 7th
- It’s a testament to just how large a lead Financial Freedom’s wholesale business enjoyed to see them still come in number 1 after 2 consecutive years of over 40% declines in volume.
Click the image below for the full report.
Hope everyone had a great weekend and is either enjoying a relaxing holiday or at least enjoying the reduced distractions if you are sneaking in some work today! We thought our readers might be interested in an update to our graph of application trends since the principal limit reductions. Without further ado, here it is:
The most concerning thing about this is the underwhelming ‘recovery’ from the expected slump in October. October’s excuse is that half of those applications were pulled forward into September to beat the principal limit reduction. That starts wearing thin in November since the average of the Sep-Nov (post PL announcement) is 6.4% below that of Jun-Aug (pre-announcement).
But by the time we get to December we have to start searching for a new, lower ‘normal’. The four month period from Sep-Dec is 13.4% below the prior four months. Two key questions come to mind: 1) Are there other reasons besides Principal Limit reductions behind the drop?; and 2) What might the new ‘normal’ application level settle at?
On the first question of other potential reasons behind the reduction, we’ve heard a long list of factors:
- Appraisal reviews leading to fewer closed deals – this would seem to suggest higher fallout rates and fewer endorsements, not necessarily lower applications
- Operational distractions from RESPA changes and NMLA licensing
- Lower broker economics leading to reduced marketing – the continuing shift to fixed rate products would seem to improve broker economics but the trend of originators leaving the industry could be plausibly expected to reduce aggregate marketing support for the product
- Fewer wholesale lenders – fallout from the World Alliance Financial and 1st Reverse shutdowns, plus funding constraints at JB Nutter have reduced the list of available wholesale lenders for reverse
These all might be just interesting sideshows to the main event of principal limit reductions reducing seniors’ demand for HECMs, but there’s no question that some combination of events is reducing HECM demand significantly in the last few months. Based on recent trends it’s possible application volumes for the year could end up as much as 20-30% lower than 2009 (avg 8,000-9,000 per month). There are many factors that could contribute to stronger volume (coops, HECM purchase, new lenders as FHA removes broker license requirements, etc.), but there’s another question that’s less speculative here too:
Would you and/or your company leave the reverse mortgage industry if your volume declined 30% from 2009?
Comment below or Contact us directly if you’d prefer not to comment publicly, but we’re very interested how many people would expect to survive that level of decline.
And for reverse mortgage loan officers, don’t forget to share your thoughts in our State of the Reverse Mortgage Originator Survey.
