Reverse Mortgages: Still a Growth Business

The reverse mortgage market may see much less of an impact from MetLife’s exit from the business than initially thought, writes a report this week from Reverse Market Insight noting the rise in volume in June to 5,182 loans. 

Endorsements during the month were up more than 17% over May. Still down year-over-year, volume looks to be stable going forward, RMI projects.

The biggest comparison to draw is between the relative impact of MetLife’s exit versus the impacts of Bank of American and Wells Fargo when they closed reverse mortgage operations in 2011, RMI notes. 

“It’s entirely too early to have any final conclusions but it would appear to be a more positive trend than we were expecting,” RMI writes.

Given that Bank of America and Wells Fargo had bank and mortgage branch operations, while MetLife’s business segment was largely independent, RMI expects better retention of its reverse mortgage volume relative to the other banks. 

Ultimately accounting for all of the market influences, the business would have grown, had it not been for the exits in 2011, RMI finds, looking at the following chart.


“Looking at the case numbers by lender underscores our theory that the one factor keeping the industry from seeing year over year volume growth is major lender exits. Case numbers from 2011 show that each of the first six months of 2012 would have shown an increase over last year if Wells Fargo and BofA are excluded,” RMI writes. 

“This chart suggests that reverse mortgages are still a growth business – something that might be more obvious from top line numbers once major brands/lenders stop exiting and perhaps other bold companies jump into the fray.”

View the original RMI report

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