HECM retail channel outpaces wholesale in May

New reverse mortgage loans continue to heavily outweigh refi and purchase loans

Home Equity Conversion Mortgage (HECM) endorsements in May rose by 4.6%, and new data breaking out the retail and wholesale channels for the month illustrate that most of that growth came from retail.

Retail HECM endorsement growth in May was 7.6% higher than the prior month, compared to wholesale growth of only 1.9% in the same period, according to the latest HECM Originators report from Reverse Market Insight (RMI). The data also illustrates that the production of new HECM loans continues to heavily outstrip both HECM-to-HECM (H2H) refinance transactions and HECM for Purchase (H4P) loans.

New reverse mortgage loans

“Equity takeout” cases — defined as HECM loans that are neither purchases nor refinances — jumped by 21.8% compared to figures from April, to 3,293 loans. H4P cases did see a growth rate of 44% in May, but that only raised the total figure to 229 loans. H2H refis jumped 14.1% to 502 loans, further cementing the grip that higher rates and lower principal limit factors (PLFs) are having on the industry as a whole.

Only two of the top eight lenders recorded volume drops for the month, while three lenders at that level, in particular, stood out for their gains: Goodlife Home Loans saw a 54.8% jump to 54 loans; Mutual of Omaha Mortgage rose by 18.3% to 589 loans (earning the top spot for the month); and Liberty Reverse Mortgage gained 13.1% to 181 loans.

Longtime industry leader American Advisors Group (AAG) did not record any endorsements for the month, owing to its then-recently completed acquisition by Finance of America Reverse (FAR).

Wholesale rankings

Longbridge Financial has also surpassed FAR as the top wholesale lender in the space, a position it first gained back in November 2022, according to RMI. While Longbridge only maintains 410 active brokers compared to FAR’s 783, Longbridge’s total wholesale market share sits at 42% as of May 31 compared to FAR’s 38%.

Liberty, AAG and Open Mortgage round out the current top five wholesale lenders according to the data.

Reverse Mortgage Funding (RMF) remains on the board for top 10 lenders in both the wholesale and retail spaces, but has not recorded any endorsements since February. As previously noted, it has also not issued any new HECM-backed Securities (HMBS) in some time, and will likely fall out of the top 10 in the months ahead.

Biggest takeaways

RMI Director of Client Relations Jon McCue said that the difference between the channels is less important than the trend of the business during a challenging time.

Jon McCue of Reverse Market Insight, a reverse mortgage data company.
Jon McCue

“Just pay attention to the fact that they are both positive. Among all the changes in the industry this year, I would say wholesale may have had some of the largest, so it is great to see that number in the positive,” he said.

The challenges are also not dampening the need certain borrowers have for the product, McCue said.

“I would certainly agree that having the second-highest case number assignment figure for the year is a nice sign that there is still a lot of interest in this product,” he said. “Given that the new equity takeout continues to climb at the pace it has been is also proof that the industry has certainly shifted the focus to new clients, and away from the low-hanging fruit [of refis]. This is important because adding new clients is the best way to grow this business, expand education, and bring new entrants into the market.”

Endorsements in June jumped once more by nearly 25% to 2,561 loans, though individual channel data for the month has not yet been released.

RMI President John Lunde previously explained that much of that month’s increase is likely attributable to AAG’s further incorporation into the framework of FAR and its parent company. Still, nine of the 10 tracked reverse mortgage industry business regions also posted gains, while only around half of leading lenders did the same in June.

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