Last month’s HECM Lenders report showed us that industry volume was up 5.3% in August, despite an expectation of lower totals for the rest of the year. Now that we can see more detailed August data in our HECM Originators report (linked below), we discover that broker/wholesale volumes had already started to swoon.
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:
September HECM endorsement numbers were down -3.7% from last month to 5,590. The number of active lenders continues to decline but has started to bottom out in the low 200′s per month, so we’ve likely seen most of the impact from FHA’s lender approval changes already baked into these numbers.
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.
Another month is in the books, and while volumes continue to be less than stellar, we’re getting a better picture of what the major lender exits portend for our future volumes. We can officially mark June as the month that BofA left the building from an endorsement perspective, given the decline from 896 retail endorsements in April to just 7 in June. We’ll dive into more detail next week, but perhaps as much as half of last month’s industry volume decline could reasonably be attributed to BofA. June could have been a 1,000 loan improvement from May absent BofA’s exit, but that’s only good for context.
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.
