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Posts Tagged ‘Metlife’

Sorting Out – HECM Lenders October 2012

HECM endorsements for October totaled 3,745, growing a paltry 1.1% from the low registered in September. This wasn’t a large enough increase to even beat the July reading, so October goes in the books as the second lowest volume month since July 2005.

Among geographic regions, 5 were up and 5 were down:

  • The top 3 regions all increased, although only Southeast/Caribbean grew significantly – up 15.7%
  • New York/New Jersey and New England are both down more than -50% since June compared to national decline of -27.8%. While the weakness in New England appears relatively broad based (page 3), the NY/NJ region is being dragged down by slumping performance in New Jersey specifically. Both Newark and Camden field offices registered larger declines vs. last year than NYC and upstate NY.
  • Oklahoma City leads a short list of just three field offices with an increase compared to last year at 6%. Salt Lake City (4.6%) and Columbus, OH (2%) also improved, with SLC averaging 84 loans per month while the other two were both under 29.

Among lenders, there were some notable performances:

  • Security One Lending grew 141% to lead all lenders at 636 endorsements. This is an enormous jump that we’ve seen dissipate somewhat in past experience with other lenders (see: American Advisors Group post-August), although in both cases there is reason to believe a good portion of that jump will be sustained and even eclipsed in the months ahead.
  • Generation grew 33.5% to capture third place behind Genworth/Liberty and just ahead of One Reverse.

Last but not least, we saw a significant decline in case numbers issued in September. After briefly rising above the benchmark set by the month after Wells Fargo’s exit last year, this key indicator of future endorsements dropped below all months since Metlife exited.

In past years we’ve seen a pullback toward year end, but September would be very early to see that effect taking hold. It’s possible companies pulled back marketing in the heart of election season, but there’s little evidence of that effect historically and we haven’t heard about significant declines in marketing from any of the large companies.

Please click the image below for the full report.

Shifting Tides – HECM Originators August 2012

August HECM endorsements bounced back up 7.1% from what we now know was only the first exceedingly low volume month in Q3. We also see that the bounce was entirely in the Retail/direct channel of the business, whereas Wholesale/TPO business was essentially flat from July to August.

Looking back to last August, it’s clear that the exit of major brands like Wells Fargo, Bank of America and Metlife is having an impact on the channel mix of the industry. August makes a particularly opportune moment to look back at the channel mix, as August 2011 was the last month with a full share from Wells Fargo’s retail presence.

As you can see from the chart above, Retail/direct endorsement volume is down -35% in the past 12 months, whereas Wholesale/TPO volume is down just -19%. Nothing to be proud of in either case, but there’s no doubt which result hurts less.

Among lenders gaining from the shifting tides, these companies are heading to San Antonio next week with celebration in mind. All rankings below can be found on page 4 of the report linked below.

Top 10 (excluding wholesale):

  • American Advisors Group took the top originator title for August after more than doubling from July and is up 107% year to date
  • Genworth popped 37% from last month and 146% YTD
  • Security One grew 44% in August and 129% from last year
  • iReverse grew 89% for the month and 5% from Jan-Aug 2011

Up and coming:

  • Cherry Creek was down slightly on the month (-8%) but up 307% from last year
  • GMFS was up 49% last month and 145% YTD
  • Maverick Funding grew 55% in August to 51 loans, after not having a single loan in the first 8 months of last year

Find your company in the trailing twelve month rankings (page 3) or August rankings (page 4) by clicking the image below to access the report.

Shaping Up – HECM Originators June 2012

HECM endorsements were up significantly in June to 5,182 loans, 17.1% higher than May. We speculated in last month’s HECM Lenders report about the possibility of Metlife pushing to close and insure as many loans as possible before their 6/30 exit date from the industry (for closing loans). Given the more detailed numbers now available in our HECM Originators report below, our theory appears confirmed.

What is perhaps more interesting is how Metlife’s exit has impacted industry overall volume. It’s entirely too early to have any final conclusions but it would appear to be a more positive trend than we were expecting. Earlier this month we focused on endorsements, so this time we’re focusing our attention on case numbers issued (applications).

Bank of America and Wells Fargo had significant bank and mortgage branch networks that generated part of their reverse mortgage volume and largely disappeared as lead generators for the industry once those companies exited. Metlife never allowed cross-sell from their insurance business, so it would seem reasonable to expect better retention of their reverse mortgage volume but still see declines from some loan officers leaving the business and others with lower volume temporarily as they find new employers in the industry and get licensed.

The chart above shows a long range perspective on case number issuance, including the lender exits in the past 18 months. May 2012’s 7.4% increase to 6,992 case numbers was unexpected in light of Metlife’s last applications being submitted in April. June continued in the same vein, up 0.6% to 7,032.

Two out of three Junes from 2008-2010 showed an increase from May so the increase is underwhelming from that perspective but does confirm the industry’s resilience after Metlife’s exit.

The trend is a bit clearer when we remove the effect of varying business days per month in the chart above. May 2012 now shows slightly down (still impressive post Metlife) and June shows a similar rise to 2011 although all of 2012 has been below 2011 thus far.

This last chart has our attention for the rest of the year:

Looking at the case numbers by lender underscores our theory that the one factor keeping the industry from seeing year over year volume growth is major lender exits. Case numbers from 2011 show that each of the first six months of 2012 would have shown an increase over last year if Wells Fargo and BofA are excluded.

This chart suggests that reverse mortgages are still a growth business – something that might be more obvious from top line numbers once major brands/lenders stop exiting and perhaps other bold companies jump into the fray.

Click the image below to access the report.