Reverse Mortgage Comeback?

One of the worst examples of an industry living in a dream was seen at the Western Regional Conference of the National Reverse Mortgage Lenders Association (see first linked article below), the trade association of reverse mortgage lenders. In describing the outlook for the Conference on a 3/18/2019 post on reversemortgagedaily.com one member of the NRMLA executive staff stated: “There’s a lot of opportunity and outlooks are positive here for the remainder of 2019...." So the evidence must support this position, right?

https://reversemortgagedaily.com/2019/03/25/new-hecm-head-hopes-to-move-needle-in-new-role/

At the Convention in support of the NRMLA position was the "new director" of the NRMLA program at HUD (see linked article below), Dr. Joshua Miller, who "...shared case number assignments and endorsement figures for the year-to-date in 2019 versus 2018 numbers, indicating case number assignments are trending up slightly, while endorsements are down slightly" (underline and bold added for effect). Yet total HECM endorsements for the first six months of fiscal 2018 was 29,832 but the HECM endorsement count for that same period in 2019 is only 15,618 making it 47.6% smaller than for last fiscal year. The total HECM count for fiscal 2018, a "valley" year in six straight years of slightly downward sloping peak to valley secular stagnation was 48,359. The expected HECM endorsement outcome for fiscal 2019 is between 32,000 and 36,000 which would be a percentage loss of between 25.6% and 33.4% from the total HECM endorsements for fiscal year 2018.

https://reversemortgagedaily.com/2019/03/25/new-hecm-head-hopes-to-move-needle-in-new-role/

Last fiscal year the loss in total HECM endorsements from the prior year was almost 7,000 for a 12.5% reduction in total HECM endorsements from fiscal 2017. Not since fiscal 2012 has there been a two or more straight fiscal years resulting in HECM endorsement losses. The expected HECM endorsement percentage loss for the two year period is between 34.9% and 42.1%. Neither of these percentages appear to justify that endorsements for 2019 are just "down slightly." In fact the situation is so bad that the just released total for the month of March 2019 shows HUD only endorsed 2,573 HECMs while in March 2018, HUD endorsed 4,300 HECMs. That is a reduction of 1,747 endorsements or a loss of 40.6% when comparing total HECM endorsements for March 2019 to March 2018.

We are in the midst of one of the top three fiscal year loss percentages in the history of the HECM industry. With President Trump calling for suggestions from HUD on how to lower losses in the MMIF due to projected cash flow losses from the HECM portion of that fund, substantial losses in endorsement production for fiscal 2019 is more than worrisome for those who originate.


 

Jake Droge

National leader enhancing the financial health of homeowners who want to remain in their homes during retirement. Partnering with Mortgage Officers and Financial Advisors in helping their Clients, US Army Veteran

5 年

Thanks for sharing your insight on the HECM program.

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Mark Schmidt

Colorado's Reverse Mortgage Concierge.

5 年

The numbers are tough for our business.

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