Posts Tagged ‘Urban Financial’
We’ve known for some time now that Wells Fargo’s endorsement numbers would drop dramatically as we headed toward the end of the year – now we have our first month’s view of the industry ex Wells.
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.
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:
TPO loan volume continued to grow in April, but wasn’t enough to keep wholesale endorsements from declining -13.3%. Retail fell further, down -18%, and the balance between the two channels will be an indication going forward to see if TPO volume is growing the business as non-FHA approved brokers jump in or just migrating FHA brokers to TPO producers.
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:
