If you want to see a telling visual of our industry’s pain, check out page 1 of this month’s report. The first graph showing year over year endorsement trends shows just how tough the road has been recently for reverse mortgage professionals from a volume perspective, with a huge gap opening up between the blue line representing 2009 and 2010’s sickly purple line. (To make it easier for all to see, we are referencing the graph below:)
It certainly doesn’t help the comparison that we had a nice rise in March 2009 resulting from the $625K lending limit increase. We’ve been talking recently about the encouraging uptick in application volumes, but that will take at least another month or two to show up here due to endorsement lag times.
So now that we have the bad news out of the way, let’s talk about some bright spots. In keeping with the increased lending limits mentioned above and our recent analysis of refinance volumes, you might be surprised to find out just how effective the lending limit increases still are at affecting the dollar volumes of different markets and lenders around the country – even one year after our last lending limit increase.
Baltimore is a great example of refinance success in a market by enterprising lenders, and this month’s report shows another good opportunity in growing markets. To highlight, let’s look at the MCA Growth Table at bottom of page 2:
Every city on this list has seen significant increases in dollar volumes that drive revenue and profit for lenders (and put dollars in senior borrowers’ pockets), with many doubling compared to last year. Since we’re showing you the result of lenders’ collective efforts in these areas it goes without saying that you won’t be the first to discover these growth opportunities, but the scale of these markets suggest that there could easily be more potential here than is currently being tapped.
We’ve consistently noticed that despite the large numbers of active lenders in big markets, many metro areas still look relatively under-served compared to rural communities when we look at senior households per active lender on our Market Opportunity Report, but it also is evident on this report in a more bottom line measure: average loans per lender. Check out the table below for a quick look:
It’s worth pointing out that Brooklyn shows up at the top of the MCA chart and here as well, but notice that Chicago has both the most active lenders and second highest loans per lender average. Sure, it’s hard to make a living just originating three loans a month in Chicago if that’s all you’re doing, but remember that’s the average – there are a lot of lenders doing much more than that in just that one market. Same goes for the other cities listed here, which have more active lenders than every other city but still show decent volumes per lender.
For those inclined to be pessimistic we freely admit that there are also a lot of lenders that do less than average in each of these cities, just as there isn’t a silver lining without a dark cloud. In the meantime, our optimistic clients can keep thinking about how lower upfront costs can reach a whole new customer base that doesn’t want every last dollar in their hands today.
If there’s any truth to the long touted statistic that 4 out of 5 senior homeowners don’t have a mortgage (and we think there is), then it stands to reason that lenders offering an efficient means of making that equity available for future emergencies at little cost today breaks new ground for where this industry can go from here.
Click on the image below to view the full report for this month.