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.

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 commented last month on the relatively narrow performance gap between retail/direct and broker/wholesale volumes as the changes from broker approval to TPO and lender compensation regulations worked its way through. This month the gap has opened back up, with retail/direct up 10.5% while broker/wholesale shrank -2.8%. We haven’t seen that large of a gap since February, as you can see from the table on page 1.

We’re not sure what’s causing the change, or even if it will continue, but we’ll be watching closely in the next few months.

Several lenders are seeing impressive growth in their businesses, with most of that coming on the retail side:

• American Advisors Group and Metlife have each grown retail more than 90% so far this year, while One Reverse, Generation and Genworth have all grown 20% or more
• Security One wholesale has grown 38.8% so far, while Urban is up 6.5% on a much larger base
• First National Bank of Layton has been steadily climbing the rankings this year, and reached the top 10 for the month of August with a 9th place ranking.

Click the image below to access the full report:

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.

We have another shoe dropping when it comes to analysis of these industry numbers given Wells Fargo’s 6/30 exit has yet to be baked in to any of the application or endorsement numbers we’ve seen yet, but we think the title of our post is appropriate given what the remaining lenders in our industry are experiencing.

Out of the 8 largest lenders not named BofA or Wells, just one declined in June. Looking at them collectively, these 8 lenders experienced a 37.9% increase in volumes from April to June, while the industry total declined -4.4% over that same period. Metlife appears at this point to be the biggest grower since the BofA exit, joining the 1,000 loan club this month for the first time.

Compared to the impact of HUD’s changes to the HECM program in October 2009, it’s very clear which had a larger impact on the industry. If anything, this highlights the importance of HUD’s pending news on financial assessment of borrowers and policy for T&I defaults.

Looking regionally, we saw improvement in all 10 regions tracked with Mid-Atlantic and Southwest seeing particularly strong growth from last month. From a year to date perspective, many areas continue to see growth:

• New York/New Jersey continues to ride the Q1 surge to show 15.9% growth from last year. Delaware and upstate New York have grown more than 25%, including both Albany and Buffalo.
• Great Plains, Southwest and Rocky Mountain are growing at double digit rates
• Midwest, New England and Northwest/Alaska are declining so far this year
• Detroit, Miami and Chicago have been the biggest decliners at the market level, all off by more than 25%

A bit of housekeeping: As HUD changes their data reporting in the wake of broker licensing changes, please note that brokers not closing loans in their own name are rolling off the active lender list over the next few months. As such, we will not be emphasizing active lender counts and changes until this stabilizes, likely toward year end. After that transition is complete, Retail Leaders will reflect the number of lenders closing HECMs in their own name.  For a report including brokered loan activity attributed to the broker, please see our Wholesale Leaders reports.

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

Last month we showed a chart that illustrated the impressive growth of TPO loans and the clear lead of a few sponsors in this channel. The updated chart shows continued growth as TPO loans made up 30% of all wholesale loans in April, and also the more competitive nature of the business as many sponsors raced to catch up.

Metlife ran out to a big lead in March but grew slower in April, while Urban, Genworth, Generation, BofA and Security One all grew significantly to more than double TPO business from 360 to 735 loans. We’re hoping in the future to analyze just how much TPO business is coming from originators new to the industry, but for now it’s clear that the sponsor side is becoming a much more competitive market.

This month’s report also raises a point in the discussion about industry consolidation, as the table on top of page 2 illustrates that some of the largest lenders declined much faster than the industry in April. We don’t put too much weight in any one month’s results, but it’s startling to see that 88% of the industry’s decline this month came from just 2 lenders: Wells Fargo and Metlife.

The 2 lenders were 44% of the industry in March, so their decline is far larger than their market share. The smallest originators didn’t catch a break though: top 10 lenders Urban and One Reverse both saw 12 month highs and Security One came in just one loan shy of their recent peak.

Click the image below to access the full report:

• Wells Fargo is still the top overall lender and top retail lender, with a combined market share of 24% including both retail and wholesale channels
• Metlife is the top wholesale lender, with 20.9% of all wholesale volume
• 1st AAA Reverse Mortgage is the top broker, averaging almost 100 loans per month

Congratulations to all three companies that led the way in a tough year for the industry.

The report this month reminds me of a funny question someone once asked me. If you have one foot in the freezer and one foot in the oven, would your head feel average?

As lame as the joke might be, it highlights the fact that averages can mask a lot of variation under the surface.  That is certainly the case in December, as we see that a flat volume month for the industry hid continued growth for Retail (+8.5%) and a big decline for brokers/wholesale (-13.3%).

The most commonly cited reason in our conversations with clients is that new regulations are making it harder to compete as a broker without closing your own loans. If that’s what is behind the recent shift toward retail volume from broker/wholesale, it suggests that many brokers are either aligning with larger firms or joining forces with others in the same position to close their own loans.

Either way, we’d expect to see the number of active lenders continue to decline (or at least grow very slowly) even as volume increases, leading to a higher average loans per lender metric. And while we’ll be the first to agree that this average doesn’t tell an individual company’s story, it does tell us a lot about the general state of the industry.

Click the image below to access the full report:

We asked last month why the volume recovery has been so narrow since May, primarily benefiting just 3 major lenders. As we discussed in last month’s report, July volumes were higher than May for only 5 of the top 10 lenders. This month, we find 7 a broader recovery with 7 of the top 10 seeing volume growth since the industry’s low point in May. Even more encouraging, the largest lender in our business saw a nice 12 month high in August, moving back to 2,000 loans for the first time in 16 months (April 2009).

While that might be small comfort to anyone whose compensation isn’t tied to Wells Fargo’s performance this year, our industry can benefit from the success of large, visible brands as we’ve seen time and again over the years.

A few other lenders stand out in this month’s report:

• Genworth continues their healthy recovery from May, with growth of 250% and their highest volume since September 2009
• Security One Lending appears to be on the comeback trail as well, also showing their highest volume since in 11 months
• The race is heating up for second place, with Metlife gaining ground on longtime industry leader Bank of America (and Seattle Mortgage previously). Metlife’s growing retail presence and continuing wholesale strength puts them within shouting distance for number 2 overall. BofA leads by over 3,000 loans for the last 12 months, but if both lenders turn in identical totals in September Metlife would still shrink the gap by 24%.

Be sure to click the link below to access the full report:

Both Retail and Broker/Wholesale volumes were up in July (albeit off the pace of a furious bounce back in June), but the contrast couldn’t be clearer: Retail growth was more than 3x as fast as Broker/Wholesale, further widening the lead Retail only recently gained in total volume.

Among lenders, there’s a very interesting divergence happening as well. From a combined Retail/Wholesale perspective, many of the top 10 lenders are under-performing the industry’s growth rate since the May low point, but 3 lenders are striking exceptions:

• Genworth is up 228% to 581 units, with much of the growth coming from Wholesale
• Metlife is up 85% to 1,062 units
• Wells Fargo is up 37% to 1,460 units

Doing some quick math, it’s clear that these three lenders alone accounted for 97% of the increase in units from May to June for the entire industry. That’s perhaps the best example we’ve ever seen of a very narrow recovery in volume, which begs the question why these three are succeeding so much more than the rest of the industry together.

These are  large institutions but there are other large institutions here that did not see similar growth, and 1 of the 3 isn’t an HMBS issuer so that argument has holes too. We don’t have an answer to this riddle for you this month, but for now we’re content to simply live in interesting times and hope someone does a case study someday.

Be sure to click the link below to access the full report: