Posts Tagged ‘Wells Fargo’
Last month we looked at state growth rates since 2007 and found North Carolina looking rosy with Texas holding its own. This month we’ll examine how lender exits have changed the landscape from a state perspective.
We looked at endorsement volumes from October 2010 through March 2011 (the last 2 quarters where Wells, BofA and FF were fully represented) to see how much market share the three collectively had by state. Top 10 states by total volume and national total are in the table below, displaying endorsements and market share from the three exiting lenders.
The results were logical, but surprising for their size. With California continuing to have the most HECM volume, the fact that exiting lenders held almost 50% market share means a huge amount of volume is potentially available. Also among the top 10 states, NC and NJ were above 50% market share.
It’s a huge opportunity for the remaining lenders and one that hasn’t been lost as the aggressive push to hire loan officers from these companies has mostly abated. That’s certainly the most straight-forward strategy, but there is likely to be significant volume still up for grabs in several of these states for those that know where to look.
From an industry perspective, it also means we should expect some of these states (especially NC) to have volumes decline more due to these market share concentrations. The combination of restrictive regulations and large market share for departing lenders means big opportunity for lenders that can do business in NC, but also adds up to opportunity lost for consumers and the industry if there aren’t enough lenders available to serve that 62%.
If you’ll be in Boston for NRMLA’s Annual Convention, don’t miss the HECM by the Numbers panel. We’ll be speaking more on this topic and Purchase/Saver opportunities, currently scheduled for Monday, Oct 24 @ 1 pm.
Click on the image below to view the full HECM Trends report for this month.
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.
Lender volume presented on this report includes third party originations (TPO) of any company not FHA approved under their approved sponsor lender. As of next month this report will be re-named “HECM Lenders” to better identify it as the ranking of HECM Lenders closing loans under their own FHA approval. If you are looking for rankings of all HECM origination companies, please see these reports.
HECM endorsements totaled 5,511 in July, down 5.9% from June and -6.6% from July 2010. And while the YTD total is still showing growth, many signs are pointing to a weak second half of the year.
First and foremost, the recent exits of Bank of America,Financial Freedom and Wells Fargo will all be impacting the last six months of this year (at minimum), although Wells Fargo endorsements are likely to continue until at least September or October given closing and insuring timelines.
But July also marked the first time in 4 months that we declined on a year over year basis, as shown in the chart below.
Given the long road to recovery from Oct 2009 principal limit reductions, it’s distressing to see how short and fragile the recovery back to growth mode was. The application declines (compared to last year) point to a continued downtrend for the immediate future, and we fully expect the absence of Wells Fargo in July applications and beyond to extend the trend.
The second graph compares the same year over year growth trends, but with endorsements lagged 4 months as per our usual application-funding-endorsement timeline assumption. If we assume a significantly negative reading in July applications, the industry’s near term future is uncomfortably clear.
All this adds up to a third consecutive calendar year decline as we’ve stated two weeks ago, as the four months of growth simply weren’t strong enough to offset what is likely to be eight months of decline for 2011 (Jan-Feb, Jul-Dec).
Housekeeping Notes:
- As of next month this report will be re-named “HECM Lenders” to better identify it as the ranking of HECM Lenders closing loans under their own FHA approval. Lender volume presented on this report includes third party originations (TPO) of any company not FHA approved under their approved sponsor lender.
- The Wholesale Leaders report will appear for the last time next week, and be known thereafter as “HECM Originators” to identify it as the best source of rankings of all companies originating HECM loans, regardless of FHA approval status
- Industry Trends will be re-named “HECM Trends” in keeping with the above changes
Click on the image below for this month’s report.
