We Have Been Told Over and Over that HECM Reverse Mortgage Production Will Be Better in the Last Half of Calendar 2019 but Is that True?

That may be true but not by more than 2,000 HECM (which is the only the reverse mortgage insured by FHA) endorsements.

Yesterday evening HUD posted its Endorsement Summary Report for August 2019. In line with the general drop in HECM endorsements during this fiscal year, August 2019 came in with just 2,341 HECM endorsements. While this is not as bad as the HECM endorsement totals for December 2018 and January 2019, those earlier months were the months during which a partial federal government shutdown took place and closed HECMs were only endorsed during part of each of those months. Excluding those two earlier months as outliers, we have not seen such a low total for any month since January 2004, over 15 yerars ago.

The August 2019 HECM endorsement total is lower than the monthly floor that RMI declared several months ago of 2,500 HECM endorsements per month. The August 2019 HECM endorsement total is 15% lower than the endorsement total for July 2019. It is also 26.8% lower than the total endorsements for August 2018.

The NRMLA Western Conference had a panel that was excited about potential HECM endorsement production for the last half of calendar 2019 but with just 5,095 total HECM endorsements for July and August 2019, it is hard to picture that result being better when the total for the same months in 2018 was 6,105 HECM endorsements and fiscal 2018 had the worst endorsement total for any fiscal year since fiscal 2005. So with the HECM endorsement total for August 2019 being the worst in over fifteen fiscal years (excluding the two outliers discussed in the opening paragraph) is endorsement production REALLY improving???

It may be that based on case number assignments total HECM endorsements for calendar 2019 could be almost 2,000 HECM endorsements more than total HECM endorsements for fiscal 2019. Ignoring the nine month period of overlap, January through September 2019, but comparing the last calendar quarter of total HECM endorsements for 2018 to that of 2019, we notice that the total HECM case number assignments related to October and November of each year are different by just over 100 endorsements, we expect that the HECM endorsement totals for the months of October and November will be less than 100 endorsements apart (due to the modified and annualized conversion rate for fiscal 2018 and that predicted for fiscal 2019) with the last quarter of calendar 2019 being the higher of the two. The problem will be December 2018 as explained in the opening paragraph to this article, i.e., the partial government shutdown. December 2019 could come in as much as 1,900 HECM endorsements higher although 1,100 is far more likely.