Reverse Mortgage Loan Limits and New MIC Reports

Wow, its taken a lot longer than we planned to get our November newsletter out, so we’ve decided that in the spirit of the holidays, we’d give ourselves a gift and combine it with December. And since we know that all of you have been waiting breathlessly for this, we are sending this out during the week of Christmas, something which probably goes against all the rules of writing a newsletter. But, that’s what archives are for – if you’ve missed any of our past Reverse IQ newsletters, be sure to check them out..

417 Revisited
Everybody is aware of the 417 limit increase on HECM loans, which went into effect on November 1st, and the expectations were high that it would reignite some growth in the reverse space. And it has – In our discussions with lenders, funding volume in the last two months is up considerably over what we had been seeing in the 3rd Quarter of 2008, probably in the 20-30% range. HECM applications, as released by HUD in their semi-monthly outlook reports, were up strong going into November as well.

Before we get too excited that this is the start of a long-term trend, let’s remember that originators were allowed to take applications for loans at the 417 limit prior to November 1st, as long as the origination fees and estimates reflected the proper new limits and fee structures. We saw a surge in applications in October, but the latest HUD Outlook Report actually shows a fairly steep decline (~ 13%) in the most recent two week period vs. the prior two weeks, and over 23% lower than the last two weeks of October.

HECM Application Trends (Case Issuances)
11/16-11/30: 6,754
11/1-11/15: 7,757
10/16-10/31: 8,797
10/1-10/15: 6,232

Is this an indication that recent funding surge is due to a buildup of applications as opposed to a real sustainable bump in volume? We think so – but we are going to hedge that bet and say it?s too early to tell. Needless to say, you can rest assured that we will be watching the numbers carefully going forward.

New MIC Reports
We’ve been hard at work over the last couple weeks reformatting our MIC reports, and rethinking our distribution and subscription methodology as well. Talking about these in order (I’ll save the best part for last), we realize that our MIC reports in their current incarnation might be a little hard to read, and, at 26 pages in length, take a little too much time to get through. So, after taking a hacksaw to the report, and giving it a fresh set of eyes from our newest employee, we’ve come up with something that we think everyone will want.

Oh, and the best part? We are going to be giving this away for free! Yep, free. Perhaps it’s the result of too much eggnog, or just the spirit of the holidays, but we are really in the giving mood right now.

Everybody on our newsletter list will get an update with more details as soon as the new version has received the finishing touches, but if you know anyone who would like to receive both our newsletter and the new MIC reports, please forward this on to them so they may sign up as well .

Happy Holidays!
The RMI Team