Lenders Trade Spikes in Wholesale, Retail Reverse Mortgage Volume in August

Home Equity Conversion Mortgage (HECM) endorsements fell by 14.1% in the month of August 2021, for a total of 3,673 loans according to the latest HECM Originators report from Reverse Market Insight (RMI). The fall marked the first month in nearly a year where monthly volume did not hit a threshold of 4,000 loans, a level maintained due to generally heightened reverse mortgage industry activity that has been taking place as the economic impact of the COVID-19 coronavirus pandemic continues.

The overall drop in endorsement volume for the month was led by the wholesale channel of the business, which recorded an 18.7% drop to the retail channel’s 11.2% reduction. However, certain reverse mortgage lenders saw specific channel volume spike for the month.

“Open Mortgage is growing wholesale volume significantly, rising 1,101 loans in the past 12 months (second only to 1,114 wholesale loans added by longtime top wholesaler FAR),” RMI detailed in its report. “They’re doing it by capturing 36% of the volume from brokers they’re doing business with, again second only to FAR.”

Meanwhile, South River Mortgage has grown its own retail volume by 1,202 loans within the same period of time, a product of the heightened HECM-to-HECM (H2H) refinance activity the industry has been experiencing for most of the year, according to RMI.

However, one surprising data point singled out by RMI revolves around the performance of the lending arm of 55 Places, which is active in the HECM for Purchase (H4P) business.

“55 Places is a great example of HECM for Purchase success,” RMI notes. “[They] more than doubled year-to-date to 40 loans with the vast majority being purchase rather than refi.”

As previously noted following the release of a previous RMI endorsement report for August data, three of the top 10 recorded volume increases when compared with their July totals. The leaders in volume gains were Mutual of Omaha Mortgage (rising 45.6% to 316 loans), Longbridge Financial (gaining 34.2% to 157 loans) and Fairway Independent Mortgage Corp. (rising 15.7% to 118 loans).

H2H refinance transactions – which, by definition, serves reverse mortgage borrowers already engaged with the product category as opposed to new borrowers seeking a reverse mortgage – remained at nearly 50% of total HECM volume in August, according to the U.S. Department of Housing and Urban Development (HUD)’s August Endorsement Snapshot Report as cited by New View Advisors.

While specific people within the industry have different feelings concerning whether or not the business will be able to adequately appeal to enough new borrowers in the future, many seem to share a consensus concerning exactly what heightened refinance volume means for the fortunes of the overall business, and what the industry should do in response to those realities once the inevitable refinance boom fades into the background.

RMI President John Lunde previously detailed for RMD that the HECM Originators report is useful in seeing the splits in and health of the retail versus wholesale channels, which helps to illustrate how lenders are doing from a more individualized and channel-specific perspective.

Read the HECM Originators report at RMI for specific breakdowns and regional performance data.

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