Wholesale Gains Drive June’s ‘Surging’ Reverse Mortgage Volume Growth

A pre-Financial Assessment rush inflated Home Equity Conversion Mortgage (HECM) endorsement growth for several reverse mortgage lenders in June, but it was a nearly 30% gain in the wholesale channel that also helped drive volume during the month, according to recent industry data.

Total HECM endorsements were up 24% in June compared to the previous month at 5,295 loans—growth that was led by a 29.6% monthly increase in the wholesale channel to 2,324 loans in June, along with a 19.9% retail gain to 2,971 units, says the latest report from Reverse Market Insight (RMI).

The pattern of higher wholesale growth relative to retail is characteristic of endorsement activity in months where volume is up, says RMI President John Lunde.

“Typically, we see wholesale volume show more volatility than retail, which we attribute to brokers being more nimble in general than retail organizations that are typically larger,” Lunde tells RMD. “So in up months we expect to see higher growth for wholesale and in down months we expect to see larger declines. That’s the pattern that played out in June, so no real surprise there.”

June’s volume growth can also be attributable to the increase in case number issuance and application activity before the Financial Assessment’s implementation in April.

“With that premise, we would expect to see lower endorsement levels as early as August but definitely by Sep/Oct given the declines in case numbers issued, applications after FA implementation and resulting declines in fundings and endorsements that will result,” Lunde says. “That should put is back below 4,000 on the endorsement side for at least one month in the very near future, but then a gradual recovery from there based on what we’re seeing for applications post-FA.”

The pre-Financial Assessment rush helped fuel growth for eight of the top 10 reverse mortgage lenders who saw gains of at least 10% in June.

While Home Point Financial (formerly Maverick Funding) made the biggest splash among the top-10 lenders, posting 55.2% growth to 149 loans, June was also a big month for several others, too.

The Money Store more than tripled to 48 loans, coming in at the number 15 spot on the top 100 HECM Originators June 2015 rankings. Meanwhile, GMFS grew 83% to 55 loans, taking the number 12 spot on the monthly rankings, while United Southwest Mortgage—doing business as All Reverse Mortgage—jumped 59.4% to 51 loans during the month.

Written by Jason Oliva

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