Reverse Mortgage Retail Leaders – May 2010

We suggested in last month’s report that we expect endorsement volumes to get worse before they get better, and May certainly proved that point. It would have been more fun to be wrong in this case: May volume came in at just 4,554 loans, down 17% from April and the lowest monthly volume since September 2005.

For the second straight month there was an even greater decline in active lenders (down 23%) which has continued a nice upward trend in average loans per lender. The lower volumes certainly encourage consolidation and outright exits by smaller brokers/lenders, but it wouldn’t surprise us if there is also another major factor at work here in new regulations/licensing requirements causing small shops to preemptively exit the business or consolidate.

We’ve seen a few headlines on this already, and it makes perfect sense we’ll see a lot more – and a whole lot more that don’t make headlines but go quietly into the night nonetheless.

This month looks a lot like an uglier version of last month, but let’s dive in a bit to see what’s hiding below the surface:

  • All 10 regions declined in May, led by Rocky Mountain (-37%) and Great Plains (-35%) while Northwest/Alaska (-2%) and New York/New Jersey (-6%) escaped relatively unscathed
  • Of the 82 metros, only New Orleans managed an increase in volume (+1%), while Houston was basically unchanged with just one less loan endorsed
  • The magnitude of change in the industry landscape is particularly apparent on page 2, where you can see just 3 of the top 10 lenders grew volume in May
    • Generation, Bank of America and Metlife each grew more than 10%, although all are still down significantly from their December volumes
    • Generation will be particularly interesting to watch in coming months to see if their recent proprietary product announcement has a ‘halo’ effect in raising their HECM volumes as well (we are also keen to see who will follow suit – just look at how fast the industry participants came up with $0 fee products). We won’t see proprietary volumes in this report, so check out our data repository if you want to learn more about how we’ll continue our comprehensive industry coverage as HECM’s market share slides below 99.9%
  • Also on page 2, the charts for Active Lenders, Endorsements per Lender and New Lenders all tell the story that the number of competitors is shrinking dramatically as volumes decline and regulations increase.  By our count, just 25 lenders endorsed their first HECM in May!

The full report is available by clicking the image below.  Enjoy!

Retail Leaders Report