Why Is NRMLA Saying: "There’s a Lot of Opportunity and Outlooks Are Positive Here for the Remainder of 2019...."
During last fiscal year (ended 9/30/2018), the total endorsed HECMs (or insured) was the worst such total in 13 years at 48,359. In the latest five months, the total new HECMs (the only reverse mortgages insured by FHA) endorsed is just 13,045 in fiscal 2019. That is the worst start for a new fiscal year in 14 years. At 13,045, the endorsements so far in fiscal 2019 are also 49% lower than that total of endorsements for the first five months of fiscal 2018.
The spokesperson for the reverse mortgage industry's trade association (aka NRMLA or the National Reverse Mortgage Lenders Association) made the claims quoted above in the Reverse Mortgage Daily article linked below. While NRMLA may have a handful of originators speaking at its meetings next week who are greatly outshining the average production for industry originators, these over producers represent the exception, not the rule. Yet with a shrinking originator base, the session topic cited in the article is relevant but it would seem that a better topic for a lenders' association would be "How to successfully recruit and retain HECM originators.
It is expected that total new HECMs endorsed during fiscal 2019 will be less than one-third of the total for fiscal 2009, the best fiscal year for endorsements at 114,692. This is certainly not the end for HECMs but it is a continuing setback for the industry. The total for fiscal 2019 is expected to be a 32% loss from the total for fiscal 2018. The drop in endorsements for fiscal 2018 compared to fiscal 2017 was 12.5%.
There is no question that the NRMLA conference next week will be looking for the silver lining that spells better results for fiscal 2019 than is currently being predicted but the trends as presented in the linked article show nothing to pin hopes on.
It is unclear what the endorsement outlook for fiscal 2020 will be. If the FHA projected losses from new endorsements during fiscal 2019 are on a per endorsement basis nearly as bad as they were in fiscal years 2017 and 2018, one can expect new FHA requirements that will require additional measures to reduce such losses and that such new requirements will most likely result in even lower endorsement production during fiscal 2020 and future fiscal years. So for right now, the future endorsement picture is not so much in the hands of originators or lenders as it is in the hands of those at FHA who provide the actuarial, financial outlook for the HECM portfolio for fiscal 2019 in the annual report to Congress on the financial condition of HECMs in the MMIF which should be posted on the HUD website in mid December 2019.