Wholesale Reverse Mortgage Channel Hit Hard in December

Largely echoing previous numbers among government-approved lenders, Home Equity Conversion Mortgage (HECM) endorsements continued to drop in December, with total endorsements falling 31.4 percent to a total of 1,749 loans, according to the latest data from Reverse Market Insight (RMI).

The HECM Originators report for December 2018 shows the losses afflicted on both retail and wholesale channels, with retail down 29.4 percent to settle at 1,075 loans, making up just over a third of the recorded figure in January of 2018. Wholesale was hit even harder, with a recorded drop of 34.4 percent finishing at 674 loans.

While RMI President John Lunde notes that the “carnage was widespread” with all top 10 lenders exhibiting drops, he also shared that these numbers are still affected by the partial government shutdown that persisted into 2019.

“The same caveats apply regarding the government shutdown as to the December HECM Lenders report released in early January,” Lunde told RMD in an email.

There were at least a few data points that provided some positivity to the overall report. Liberty Home Equity managed to grow their retail volume to 39 loans, marking an 8.33 percent increase. Resolute Bank saw a 60 percent jump in volume to 16 loans, while Integrity 1st Mortgage jumped to 9 loans, marking an 80 percent increase for that lender.

“I thought it was encouraging that some originators bucked the trend, although given that we’re talking about endorsements rather than applications or fundings that could be timing noise rather than true business dynamics,” Lunde said. “I still wouldn’t read too much into this one given the inherent noise of the shutdown effect, other than it was even weaker than expected for seasonal and shutdown reasons.”

Although the overall percentage figure is virtually identical in this instance to RMI’s previous December HECM Lenders report, 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.

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