Trending Together – HECM Trends November 2011

We’re getting closer and closer to the final reports of 2011, so we’ll preface next month’s numbers by showing one of  the biggest trends of the past 3 years: Lender consolidation.

One of the questions we hear a lot is whether having more lenders is good or bad for the industry. Of course, most people dodge by saying that more of the right type of lenders is a good thing, which is much easier to agree with.

We can’t prove that more or fewer lenders is the better way to go, but one thing is becoming evident over time. Whichever comes first, lower active lender totals march in lock-step with lower loan volumes.

It’s no secret that endorsements have been lower the past few years, nor that there are fewer lenders actively originating HECMs. What’s striking about the chart is just how correlated the two trends have been. The endorsements figures are easy enough to find (any of our 3 monthly reports). You can find the active lenders count including TPO (red line in chart) in the top left box on page 2 of HECM Trends each month, and the FHA approved HECM lenders (blue line) in our HECM Lenders reports.

It’s also worth pointing out that as FHA switched from approved brokers to TPOs approved by lenders (gap between red and blue lines on chart), HECM volumes stayed in line with the red line that includes TPOs. This would suggest that the active originators metric including TPOs is more representative of the health of the industry.

Click on the image below to view the full HECM Trends report for this month.

HECM Trends