After months of uneven recovery following last October’s program changes, reverse mortgage volume has fallen to a low it hasn’t seen since 2004.

The latest data from analytics firm Reverse Market Insight reveals that HECM endorsements fell 17.4% in November to 2,553 loans – reaching its lowest point since new policy guidelines were implemented last fall.

The revised guidelines, known throughout the industry as the 10/2 changes, reduced the amount of proceeds and the number of people who could qualify for the loan.

All but one region saw volume drop last month, with Great Plains being the exception with a 3.2% gain.

RMI pointed out that Pacific/Hawaii’s total last month exemplifies the industry’s downturn – that region declined 68.2% last month from January.

All of the top 10 reverse mortgage lenders saw their volume fall last month. Among those top 10, eight are down so far this year compared with last, with some posting a difference as high as 30%.

RMI President John Lunde said the recent boom in private, non-agency reverse mortgages could be partly to blame.

“It's very likely that proprietary is eating up some of what would otherwise be HECM volume,” Lunde said. “The bigger question is whether that volume/revenue/margin is enough to offset the decreased HECM total. On that front, I'd say it's most likely not, but it is reasonably possible.”

“I think HECM is at a place where it's easier than ever to compete against for proprietary products and may become a smaller share of the total reverse market,” Lunde added.

But if proprietary volume is not driving the HECM’s decline, then Lunde said the drop in volume is more troubling.

One possible reason could be the fact that some lenders have diversified in order to remain profitable in today’s climate, Lunde said.

“This could also be a side effect of some of the largest reverse originators de-prioritizing reverse as they build other product lines to become ‘product agnostic,’” he said. “That's likely the right move for those businesses given the reverse environment, but it could lead to lower reverse volume and more volatility in reverse activity.”

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