Reverse Mortgage

Reverse Mortgage Quantity Bounces Again in September, HMBS Approaches Annual Document


It looked like the days of reverse mortgage volume over 4,000 units in a single month are behind us, but the latest industry performance data shows that it is not quite over yet.

Home Equity Conversion Mortgage (HECM) endorsement rose sharply 17.6% to 4,326 loans in September 2021. This is based on data compiled by Reverse Market Insight (RMI). While July may have marked the end of a streak of monthly volumes above a threshold of at least 4,000 units that the industry has seen since late 2020, the September volume spike fully broke the lag seen in August. It may indicate that the increased volume has lasted at least a while longer.

New Home Equity Conversion Mortgage (HECM) backed securities (HMBS) production again saw a record $ 1.03 billion in HMBS issues in the seventh month of the post-London Interbank Offered Rate (LIBOR) “era” . Last year’s records will almost certainly fall by the end of 2021, as the first nine months of the year totaled $ 9.3 billion in total in 2020, a total of $ 10.6 billion in HMBS issues, a recent industry high of Dwarfed $ 10.5 billion in 2017.

The overall boost to the industry from refinancing volume remains a problem for refinancing business growth, according to analysts who spoke with RMD, as the refinancing volume percentage is said to have topped 50% of HECM endorsements for the first time in August, according to Time this month Analysts.

HECM-Volume is making a comeback

When asked about the occurrence of a sharp spike in volume after a notable monthly decline and whether or not it is causing industry stability concerns, it has just come too often to warrant significant consideration, according to John Lunde, President of RMI.

“No, we’ve seen it too many times to worry about month-to-month volatility in recommendations,” he told RMD. “[This is true] applications and grants show more stability, especially when case numbers are issued. I just see it as the lumpiness inherent in these numbers. “

All national regions surveyed saw performance increases almost consistently, with the Midwest region increasing by 50.3% to 242 loans; the Southeast / Caribbean grows 24% to 646 loans; and the mid-Atlantic increases 20.5% to 200 credits. The notable increase in regional performance suggests that the slump seen in the previous month’s data may have been a little exaggerated, says Lunde.

“This again suggests that August wasn’t as bad as it looked and it’s more of a timing issue, possibly with vacations affecting staffing etc,” Lunde explained.

In terms of specific lender performance, all but two of the top 10 lenders saw volume increases in September, with the exception of Reverse Mortgage Funding (RMF) and Fairway Independent Mortgage Corporation, respectively. In the case of RMF, there were 28 fewer loans approved in September than in August, while Fairway received 39 fewer loans per month.

The top 10 performance gains included Liberty Reverse Mortgage (110.4% increase to 303 loans); HighTechLending (71.2% increase to 125 loans); and Longbridge Financial (up 68.8% to 265 loans).

“Longbridge and HighTech both stand out [among their peers in the top 10] as reached new monthly highs compared to the last six months or more, ”Lunde said of the lender’s performance for the month.

When asked if it was possible that the HECM endorsement volume could stay above 4,000 units for the remainder of 2021, Lunde was optimistic.

“[That threshold is] very realistic until we see more of a pattern several months below this level, ”he said.

HMBS issue on track for a record year

In terms of HMBS issuance in 2021, the month of September stands out as an outstanding year, according to New View Advisors.

“HMBS issuers posted record numbers in September with the highest monthly issuance volume this year and another record for new credit pools,” New View described in his comment on the month’s issuance data. “They spent just over $ 1.2 billion in new HMBS as refinancing activity continued to be strong.”

While the final year of HMBS annual volume in 2010 was $ 10.8 billion in emissions, the situations between now and this year are only comparable at the level of raw emissions and, according to Michael McCully, partner, show a number of specific differences up at New View Advisors.

“The issuance volume of 10.6 billion US dollars in 2020 is the relevant volume record,” McCully told RMD. “The 2010 volume was before the capital limits were lowered or the financial valuation set, so 2010 performance is not comparable [to what we see in 2021]. “

Be that as it may, given the emissions figures, the specific emissions record for this year will almost certainly fall in the first nine months of 2021 alone. During this period, the issue volume is over 9 billion US dollars. Still, the rampant activity in HECM-to-HECM (H2H) refinancing activity should remain an industry concern, McCully says.

“H2H refinancing remains stubbornly high,” says McCully. “We want the origination volume of new customers to continue to increase. [The industry should] Watch out for a deterioration in review quality and misleading marketing campaigns. “

In the new issuance of around $ 1.03 billion in September, 107 pools were issued, including 47 CMT pools with first-time participation, which is very similar to the data recorded by New View for the previous month. Before the beginning of 2021, no new CMT pools had been issued for several years due to the switch to the LIBOR index.

Read the HECM Lenders Report at RMI and the HMBS Issuance Report at New View Advisors.