The HECM market surged in early 2022
HECM lenders started the year strong, with industry-wide endorsements rising 10.5% on a monthly basis in January, according to Reverse Market Insight. Numbers also rose across the majority of the top 10 reverse mortgage companies according to a ranking by RMI.
The total number of endorsements for Federal Housing Administration-backed reverse loans rose to 5,763 from 5,214 in December. In retail channels, volumes jumped 13.3% to 3,313 from 2,925 month over month, while wholesale recommendations rose 7% to 2,289 at 2,450. Approval volumes over the last twelve months reached 54,179, with a split of 31,646 and 22,543 between retail and wholesale.
“When we look at the numbers, we see that industry-wide HECM counseling sessions jumped in the month of January compared to previous months. These FHA-mandated sessions are a good leading indicator of HECM production Joe DeMarkey, head of strategic business development at Reverse Mortgage Funding, said in an emailed statement to National Mortgage News.Advisory sessions increased 20% on a monthly basis in January and 50% per compared to the same month a year earlier, he noted.
Industry leader American Advisors Group, which dominates the reverse mortgage market with a one-third share, saw a 5.3% increase in endorsements, from 1,568 to 1,655. However, the second most big firm, Finance of America Reverse, posted a monthly loss, with new mentions down 19% to 799 from 982 in December. In third place was Reverse Mortgage Funding, whose numbers increased by 27% between December and January, from 415 to 526. Rounding out the top five were Longbridge Financial and Liberty Reverse Mortgage, whose numbers both increased by percentages double digits on a monthly basis at 47% and 18%, respectively. Eight of the top 10 reverse lenders saw endorsements rise in the first month of the year.
Contributing to the increased interest in reverse mortgages has been a increased HECM loan limit which went into effect Jan. 1, according to DeMarkey. “The substantial increase from $822,375 last year to $970,800 this year means borrowers can leverage more value for their homes,” he said in a statement sent to National Mortgage News.
The rule change coincides with research over the past few months, which shows that home equity increased at an accelerating rate across the country. Homeowners aged 62 and over saw their cumulative home wealth rise by $396 billion, or 4%, to $10.2 trillion between the second and third quarters of last year. These values were determined by the National Reverse Mortgage Lenders Association and Riskspan, which found that the growth was mainly due to a $440 billion increase in home values, offset by a $44 billion increase in debt. mortgage for seniors. The high volume of activity in HECMs to start 2022 also continues the lending trends that have developed towards the end of last year.
The reverse mortgage market space has seen renewed interest over the past 12 months among many lenders, with new hires at several companies taking on the product, including Cherry Creek Mortgage. The Denver-based lender decided to sell an aging HECM services portfolio and introduced a new reverse division in late 2021, bringing together a team of managers to scale operations. The efforts contributed to a 303% year-over-year increase in creations in January, which totaled 117, they said.
“Our focus for 2022 is focused on growing reverse mortgage, wholesale and closed mortgage sales opportunities while building a new portfolio of reverse mortgage services,” said Bruce Barrnes, Managing Director, Reverse Mortgage Division. of Cherry Creek, in an email to National Mortgage News.