S.S.D.D. – HECM Lenders April 2012

The past few days have been dominated by Metlife’s exit announcement, but regardless of how you feel about that news the impact on industry numbers simply hasn’t been felt yet. We mean that in the best possible way, as April endorsements rose 4.9% to 4,595 loans after the horrible, no good, very bad month in March (apologies to one of our favorite children’s books).

From a regional perspective it was an even 5 up, 5 down month, with the two biggest regions (Southeast/Caribbean and Pacific/Hawaii) both snapping back to February levels.

March case numbers issued also had a bit of good news for us, rising 4.1% from Feb to 7,075. Oddly enough Feb-Apr all have the same number of business days, so it’s a clean comparison to see business trends this time of year.

We aren’t going to weigh in on the Metlife news/rumor mill – we’ll stick with the likely volume implications in coming months based on what we’ve seen happen in last year’s lender exits. Barring any immediate big announcements we can expect May and June case numbers issued to drop 11-15% as loan officers close out their pipelines without taking new applications. After that, the best case scenarios for industry volume might see an additional 1-2 months of transition during hiring/training/licensing/marketing ramp up at a new firm.

The less optimistic scenarios would just extend those timelines out and/or show a number of loan officers leaving the industry, both of which would push application and endorsement expectations lower.

Pretty much any way you slice it, we should all be expecting <60,000 endorsements for calendar year 2012. Taking the under was already a slightly better bet before Metlife’s announcement, so from here the pessimistic scenario would land us at just over 55K loans. That assumes no new case numbers post 4/30 from the Metlife retail team and a stable level per business day from all other companies.  Lots of other better scenarios are possible, but very unlikely for any of them to produce 60K or more endorsements in 2012.

Click on the image below for this month’s report.