Posts Tagged ‘reverse mortgage competition’
Surviving and thriving in the reverse mortgage industry these past few years has required adaptation and flexibility:
- Where ARMs once dominated the landscape (all at a single margin of 150 on the same CMT index no less!) fixed rate HECMs have been 2/3 or more of volume for over 2 years. That change happened in less than 6 months.
- Where this business was once powered by “kitchen table” salespeople at Wells Fargo, Bank of America, Metlife and Financial Freedom, we saw 2 of the top 3 lenders in March (page 4) were independent reverse mortgage lenders exclusively originating through their call centers.
- Where there previously was one HECM (Standard) focused on one customer niche (immediate cash), we now have two more HECM products that better suit financial planning (Saver) and home purchases (Purchase).
Beyond the shifts mentioned above everyone has had to adjust to an industry with fewer loans in the past few years, even if many companies are doing better than ever. That volume shift became most apparent to us this month when we noticed our top 10 zip code rankings were only returning 6 entries.
To make a long story short, we realized we had restricted the rankings to only zip codes averaging 5 or more loans per month. This made sense a few years back when there were several hundred zip codes each month with this level of volume but that list was down to 24 in March and most of these were lower Jan-Feb resulting in just the 6 zip codes with 5+ on average in Q1.
This volume decline is not groundbreaking news to anyone since we’ve been reporting on it for years now, but it does highlight the need for everyone to adapt. The report below has some great information to follow the industry nationally and we’re happy to provide it if that’s all you need.
If you would like to see local statistics that can help you work smarter and target your sales and marketing efforts for optimum results, this week is a great time to learn more in person. Schedule some time to sit down with us at NRMLA Irvine this week, or just give us a call if you’re not planning to attend.
Click on the image below to view the full HECM Trends report for this month.
The past few days have been dominated by Metlife’s exit announcement, but regardless of how you feel about that news the impact on industry numbers simply hasn’t been felt yet. We mean that in the best possible way, as April endorsements rose 4.9% to 4,595 loans after the horrible, no good, very bad month in March (apologies to one of our favorite children’s books).
From a regional perspective it was an even 5 up, 5 down month, with the two biggest regions (Southeast/Caribbean and Pacific/Hawaii) both snapping back to February levels.
March case numbers issued also had a bit of good news for us, rising 4.1% from Feb to 7,075. Oddly enough Feb-Apr all have the same number of business days, so it’s a clean comparison to see business trends this time of year.
We aren’t going to weigh in on the Metlife news/rumor mill – we’ll stick with the likely volume implications in coming months based on what we’ve seen happen in last year’s lender exits. Barring any immediate big announcements we can expect May and June case numbers issued to drop 11-15% as loan officers close out their pipelines without taking new applications. After that, the best case scenarios for industry volume might see an additional 1-2 months of transition during hiring/training/licensing/marketing ramp up at a new firm.
The less optimistic scenarios would just extend those timelines out and/or show a number of loan officers leaving the industry, both of which would push application and endorsement expectations lower.
Pretty much any way you slice it, we should all be expecting <60,000 endorsements for calendar year 2012. Taking the under was already a slightly better bet before Metlife’s announcement, so from here the pessimistic scenario would land us at just over 55K loans. That assumes no new case numbers post 4/30 from the Metlife retail team and a stable level per business day from all other companies. Lots of other better scenarios are possible, but very unlikely for any of them to produce 60K or more endorsements in 2012.
Click on the image below for this month’s report.
We said last month that we didn’t expect endorsement volumes to continue their good times given the declines in case number assignments and this month underlined the point. March endorsements totaled 4,381 loans, down -19.3% and the lowest level since September 2005.
This marks the first time endorsements fell below the bottom of May 2010 after FHA’s October 2009 reduction in HECM principal limits. It makes perfect sense given that case numbers issued in January fell to the lowest level since May 2005, but we’d also expect at least one more month of similarly low (and probably lower) volume before February’s bounce in case numbers issued resuscitates endorsements a bit.
The above chart shows this is not a seasonality nor business day related drop, as the pattern for Jan/Feb follows the past 2 years closely but is simply shifted downward.
Turning to the report details, the decline in endorsements was broad based as all ten regions saw a decline of -11% or more from Feb. Among lenders, the only top 10 lender showing a gain was American Advisors Group, up 28% and showing the second highest total in its history.
Click on the image below for this month’s report.
