Sometimes it seems that the more things change, the more things stay the same. Despite tremendous changes underneath the surface this year (lending limits increased, HECM for purchase authorized, principal limit reductions, etc.) the top line in the reverse mortgage business is in a dead heat with last year’s results. As of September, 2009 volume of 87,130 is just 0.4% lower (393 loans) than 2008 at the same point. For those of you keeping score, the next three months need to be as good or better than September to avoid showing a negative growth rate for the year.
Of course, for those of you that just can’t adjust from the federal fiscal year to our unorthodox calendar year approach, your year is already over and we finished up 2.3% from fiscal 2008.
A few highlights of the report this month:
- Volume in September was up 6% from August, in lock step with last year’s similar increase in the same months. For a good sense of seasonality (or lack thereof) in the reverse mortgage business, check out the Endorsement Volume chart toward the middle of page 2.
- Endorsements per lender improved after falling off a cliff last month but remains below all other months in 2009. Good news is that both Active Lenders and New Lenders ticked down, with New Lenders continuing its downtrend since peaking in March 2008. We haven’t seen a meaningful increase in Active Lenders (by month) since early 2008, so the declining level of New Lenders should eventually stop replacing the companies exiting the business and start declining on an overall basis. Remember, 1/2 of the new lenders exit the business within 6 months of their first loan.
- Industry concentration increased in September for the first time since April, as the top 10 lenders collectively originated 40% of all loans last month
- Security One and OmniHome are combined in the report and jump back into the top 10 on the strength of that combination, coming in at 9th for the trailing twelve months
Click the report for full details.
There’s a lot to say about April, but the headlines will undoubtedly read that the industry set a second consecutive record for monthly endorsement volume, something we haven’t seen since early 2004. Total volume of 11,660 loans was up 3.5% from March and 21.9% from April 2008. YTD volume was also up 4.4% vs. ’08, the first positive reading on a YTD basis this year.
- Competition: The number of Active Lenders has stayed relatively flat despite the increase in volume, causing the average volume per lender to jump back into territory not seen since early last year. If this trend continues we expect we’ll have much happier readers, as this seems to be the most influential indicator we track when it comes to our clients’ relative happiness.
- Top 10: 8 of the top 10 lenders increased their volume in April, and One Reverse would have been up except for their ridiculously strong numbers in March. The industry heavyweights continued to take share, collectively representing 44.6% of YTD volume and 48.8% of April volume.
- Regions: The changing of the guard continues from a regional perspective, with Southeast/Caribbean and Pacific/Hawaii both flat to down, while several other regions charge ahead. Volumes were particularly strong in the NY/NJ and Mid-Atlantic corridor on the East Coast, while growth in the West continues to be about anywhere but the coast, as Southwest and Rocky Mountain regions produced. Midwest continues to quietly creep up on our leading regions, helped by strength in Chicago and surrounding areas.
- Metros: Lots of great stories to talk about in the metro looks, so be sure to check the report for full details. A few highlights:
- Greensboro is a great example of the divergence in the Southeast/Caribbean. Florida metros are struggling, while several other metros in the region are growing strongly. Greensboro stands out because there are relatively few lenders originating loans there, and though new lenders are entering the number of loans is still growing faster.
- If you can get licensed in New York, go originate as many higher limit HECMs as you can while no one else is paying attention. And if New York’s rumored 18 month licensing process is tying you in fits, check out San Francisco and the broader Bay Area in California for a very decent backup choice.
- Richmond continues to impress as the industry’ success in DC seems to be catching on regionally
- Des Moines is still small and could easily be ruined by too many lenders jumping in, but looks attractive for now
- The Twin Cities are starting to look like Chicago with less competition, and you can consider that a glowing recommendation!
- Texas and the Southwest are consistently strong across the board, with Houston as the only exception. Alburquerque and New Orleans are both growing well, but even Houston has a saving grace with relatively low competition.
When you’re ready to grow, contact us to find your best markets. Thanks for reading!
We’ve already talked extensively about the volume increase in March, so check out the Retail Leaders and Industry Trends posts if you’d like to see more on top line volume. Something we haven’t talked about a lot yet, however, is how Wholesale is trending.
Many of you might have already guessed that ‘Retail’ performance by the direct lenders was stonger than ‘Wholesale’ performance by the broker channel in March based on our earlier comments about market concentration increasing, but the numbers right at the top of the report make it plainly obvious:
- Retail volume by direct lenders increased 33.4% from February to March, while broker volume through the Wholesale channel increased 15.4%
- A big part of this is due to a re-surgence by Wells Fargo in March, with a 700+ endorsement improvement from February to March that was bigger than total volume for all but the top 5 lenders in March. Endorsements can be volatile due to insuring delays and other issues, but it’s still a pretty impressive boost.
- Over the last 12 months there have only been 2 where Retail volume outpaced Wholesale: March 2009 and May 2008. We’ll be watching closely to see if the trend lasts, as I suspect many brokers might be also…
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Several companies continue to benefit from turmoil in the Wholesale market, as both Generation Mortgage and Urban Financial have more than doubled their total volume from last April. Both have benefited greatly from increased Wholesale volume, although Urban has been notably more balanced in their approach to the two channels with 52% Retail vs. 40% for Generation.
Money House Inc continues a remarkable climb into the top ranks of reverse mortgage lenders, ranking 17th (up from 23rd last month) nationally over the past twelve months. They’ve generated 620 loans without any Wholesale volume, and even more amazing is that they’ve done it all in the territory of Puerto Rico. This got me thinking about Puerto Rico, and the results are very interesting:
- Jumped from 31st ranked state in 2008 ( loans) to 21st in Q109 (425 loans)
- Popular Mortgage used to dominate the rankings here (they were the only lender back in 2005-06), but Money House has capitalized on recent challenges at Popular to take a dominant position in the market with 270 loans in Q1 vs. 55 for their nearest competitor (AAA Concordia) and just 10 for Popular
- Puerto Rico has already generated almost half as much volume in Q1 as it did in all of 2008 – one of the strongest growth markets in the country!
- We’re not sure how hard it is to get a lending license in Puerto Rico, but if you don’t know it’s probably worth checking into it…
Enjoy the report and let us know if you want to find more strong markets like this.
