The number of reverse mortgage cases reaches a two-year high
According to data collected by Reverse market insight (RMI).
But after additional data for the month of October was released, one measure of the reverse mortgage industry’s performance – HECM case number assignments emerged from the Federal Housing Administration (FHA) – experienced a surprising increase at the time.
Assigning case numbers marks a crucial first step in the reverse mortgage origination process. They are issued by HUD once a HECM loan application is submitted to the agency. Case number assignments and loan volume returns may ultimately diverge, but the former can often be predictive of the latter.
In October, HECM case numbers rose 17% to 4,331 – the highest in more than two years, according to a December analysis from RMI. The majority of these assignments involved so-called equity takeout cases, which are new reverse mortgages that are not purchases or refinancings. These case numbers increased by 18.1% to 3,399.
HECM-to-HECM refinance business grew at a faster pace than equity withdrawals, rising 18.6% to 765. But equity withdrawals had a much larger share of the total, which RMI and other analysts say is key to its future health. of the industry. This is especially true after the post-pandemic refinancing boom fades.
The number of HECM for Purchase (H4P) cases decreased by 7.2% to 167 cases, or 3.8% of the total cases for October. Despite the reverse mortgage industry’s continued efforts, H4P lending has failed to make meaningful inroads with reverse mortgage customers.
In an independent actuarial study of the Mutual Mortgage Insurance (MMI) Fund submitted with the FHA annual report to Congress Late last year, reviewers ruled that H4P volume is not significant enough to warrant its own breakout among broader HECM program data.
“This program allows seniors to purchase a new primary home and obtain a reverse mortgage in a single transaction,” the report said. “However, these HECM for Purchase loans represent a small percentage of HECM recommendations each year. […] In our analysis, traditional HECMs and pre-purchase HECMs are treated the same because the volume of pre-purchase HECMs is small.”
The updated figures for October also illustrate the gap between retail and wholesale HECM products. The growth of the wholesale channel (18.6%) almost tripled in October compared to that of the retail segment (6.7%). But RMI found that only half of the top 10 lenders in the sector posted volume gains compared to September.
Longbridge financial And Goodlife Home Loans posted the strongest gains in October, with growth of 51.6% and 50.5% respectively. According to RMI, the vast majority of Goodlife’s activities take place in the wholesale channel. Fairway Independent Mortgage Corp. saw a 31% increase in loans in October.
