HMDA Information Names High 10 Reverse Mortgage Lenders in 2020, Wholesale Outpaces Retail in June 2021
The Consumer Financial Protection Bureau (CFPB) released a new report and analysis of the data released by the Home Mortgage Disclosure Act (HMDA) in 2020 to better understand the mortgage market landscape. The new analysis contains extensive information on mortgages disclosed by financial institutions and contains important information specifically relevant to the reverse mortgage industry and the Home Equity Conversion Mortgage (HECM) program.
In a year where both interest and business in the reverse mortgage product has grown, the HMDA data helps put the company’s performance in relation to the broader mortgage market and highlight some key metrics that highlight the business realities that have been much debated lately. This includes the trends related to HECM-to-HECM refinancing as well as a comparison between HECMs and Home Equity Lines of Credit (HELOCs).
Additionally, last June, the reverse mortgage industry outperformed its wholesale channel over the retail channel for the first time in five months, according to data compiled by Reverse Market Insight (RMI).
HMDA data: HECM outperforms HELOC
In direct comparison with the reverse mortgage market, the HELOC market appeared to be declining in 2020 after the CFPB reviewed the data.
“The sharp increase in the total number of loans and applications in 2020 will be driven by the increase in closed-end mortgage loans,” the HMDA data release said. “The number of HELOC entries has continued its downward trend since 2018 and the total number of HELOC grants fell from 1.042 million in 2019 to 869,000 in 2020. On the other hand, the total number of reverse mortgages rose from 35,000 to 43,000 year-on-year.”
This is generally in line with what other reverse mortgage industry analysts have said about the 2020 volume spike, but the fate of HELOCs could also come with the discontinuation of product offerings at some major credit institutions during the heaviest days of COVID-19. Coronavirus pandemic.
In mid-April of last year, JPMorgan Chase discontinued its HELOC offers in preparation, the organization announced.
“We are temporarily pausing new applications for home equity credit lines due to economic uncertainty,” said Trish Wexler, chief communications officer at Chase Consumer and Community Banking, in an email to RMD. “Customers can continue to tap into their home equity by cash-out refinancing their existing mortgage.”
According to Dr. Wade Pfau and Stephen Resch of Finance of America Reverse (FAR) commented on some speculation from academics and professionals that a large institution pausing its HELOC offerings could provide a potential advantage for reverse mortgage companies. However, whether there is a direct link between Chase’s decision to suspend HELOCs and the rise in reverse mortgage lending is beyond telling.
Top 10 Reverse Mortgage Lenders
The CFPB analysis of the HMDA data also took a closer look at the top 10 reverse mortgage lenders.
“Overall, the top 10 reverse mortgage lenders accounted for 39,649 reverse mortgages, or about 91.7% of all reverse mortgage lending reported under HMDA in 2020,” the data reads. “American Advisory Group” [sic] was the largest reverse mortgage lender, reporting HMDA data in 2020 and accounting for approximately 35.0% of all reported reverse mortgage lending. Finance of America Reverse LLC followed with an annual market share of 20.2%. “
CFPB | CC0CFPB-HMDA Data on Top 10 Reverse Mortgage Lenders in 2020.
In addition to AAG and FAR, the last remaining lenders in the top ten table of CFPB include Reverse Mortgage Funding (RMF); Mutual of Omaha Mortgage; PHH Mortgage Company; Longbridge Finance; Open mortgage; High tech lending; Liberty Home Equity Solutions; or all reverse mortgages.
Interestingly, both PHH and Liberty are subsidiaries of Ocwen Financial Corporation, with Liberty serving as a division of PHH. When it was moved to PHH, the lender changed its name from Liberty Home Equity Solutions to the simpler Liberty Reverse Mortgage in March 2020, but the CFPB data still reflects the name the lender gave at the beginning of the year had retained year. This business change likely required the reporting of two HMDA records for this period; one from Liberty and one from PHH.
Further HMDA data to analyze mortgage performance in 2020, including for reverse mortgages, could come from the CFPB in the future. Read the 2020 CFPB Mortgage Market Activity and Trends report.
June 2021: Wholesale reverse mortgage channel outperforms retail for the first time in several months
HECM endorsements were down 4.2% in June 2021, which translates to 4,158 total loans according to RMI’s latest HECM originator report. The decline comes amid the generally increased activity in the reverse mortgage industry that has taken place over the past few months as the economic impact of the COVID-19 coronavirus pandemic continues as the volume topped the 4,000 loan threshold again for the month.
Interestingly, June marked the first time the wholesale channel outperformed its retail channel in five months, with the shift generally reflected in the performance levels of the country’s major reverse mortgage lenders. However, only three lenders in the top 10 managed to increase volume in June.
Mutual of Omaha Mortgage rose by 43.5% to 333 loans, marking the highest monthly total since the changes to the Capital Limit Factor (PLF) of 2017 came into effect in January 2018. This was followed by a 10.5% increase in HighTechLending to 95 loans, followed by FAR increasing 0.2% to 622 loans for the month.
RMI President John Lunde previously explained for RMD that the HECM Originators report is useful for seeing the breakdown and health of retail and wholesale channels, which helps illustrate lender performance from a more individual and channel-specific perspective .
See the HECM Originators Report at RMI for specific breakdowns and regional performance data.