The reverse mortgage industry continues to fumble in the wake of last year’s program changes, with new data pointing to a complete reversal of previous indicators of market recovery.
According to analytics firm Reverse Market Insight, HECM volume rose nearly 10% in August, only to fall about 10% in September.
And, while seven of the top 10 HECM lenders saw their volume grow in August, seven out of 10 saw their volume fall in September.
The latest data signals yet another setback for the industry as it tries to adjust to program changes issued in October of last year that reduced the proceeds of the loan and the number of people who could qualify.
RMI President John Lunde said he predicts the HECM endorsement pattern to show very slow growth over time as lenders adapt.
He also said the industry was anticipating the Federal Housing Administration’s 2018 Report to Congress on the health of the Mutual Mortgage Insurance Fund, and that some worried the report would lead to additional reverse mortgage changes.
While this didn’t prove to be the case, Lunde said it could explain why August saw a stronger performance than September.
“My newest point of concern is that HECM case numbers issued dropped significantly in September after a solid August,” he told HousingWire. “If that's because originators were pushing borrowers to get case numbers ahead of any additional changes FHA might make to the program, then it's not a huge deal as Aug./Sep. averaged together are very similar to the prior several months.”
The latest report revealed that endorsements for reverse mortgage loans fell 9.9% in September to just 2,874 loans, with both retail and wholesale channels experiencing a decline.
Wholesale volume fell 10.1% in September, according to the report, while retail fell 9.8%, setting a new low at 1,695 loans.
Lunde said the data suggests that larger lenders are less interested in growing HECM channels than smaller brokers. He also said the fact that wholesale hasn't fallen to new lows is positive.
“The main point I take away from our HECM Originators report is that retail is still declining, while wholesale is not making new lows,” Lunde added. “That's kind of typical in that retail typically adjusts slower both up and down than brokers.”
The report also revealed that only three lenders posted positive gains for the month: Liberty Home Equity Solutions (52.8%), HighTechLending (7.8%) and Longbridge Financial (3.1%).
Lunde said time will tell if September’s endorsement totals were simply a reaction to possible program changes, or if it’s a sign of something more troubling.
“If we see October case numbers issued in line with September, then it's much more concerning, but we likely won't know that until closer to year end.”