Is Lower Lender Competition Bad for the Reverse Mortgage Business?

When the reverse mortgage lender pool gets shallower, the volume splash grows smaller, according to the latest Reverse Market Insight HECM Trends report.

Lender consolidation has been one of the biggest trends in the past three years, and the declining loan volume is proportional to the decreasing number of lenders. Whether or not having less lenders is good or bad for the industry hasn’t been proven, says RMI, but one thing’s clear: “lower active lender totals march in lock-step with lower loan volume.”

In the past few years, endorsements have gone down—and so has the number of active lenders.


Source: Reverse Market Insight, HECM Trends

“What’s striking about the chart is just how correlated the two trends have been,” says the newsletter, going on to note that when the Federal Housing Administration switched from approved brokers to TPOs approved by lenders (which accounts for the gap between the red and blue lines on the 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.”

Regionally in terms of endorsement growth, much of the “Sunbelt” and West Coast are trending warm. Out of the top-ten states for endorsement volume, only four have positive year-to-date growth, with Pennsylvania and North Carolina posting double-digit gains. Volume in Florida (#3), Maryland (#8) and tenth-ranked Illinois continues to ebb, however, with all three experiencing declines of more than 21%.

View the newsletter here.

Written by Alyssa Gerace

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