Home equity conversion mortgage (HECM) endorsements fell 4.2% in March, primarily due to lower wholesale endorsement volumes, although retail origination volumes improved month over month. This is based on Reverse Market Insights (Rocky Mountain Research Institute).
Total retail endorsement loans increased 9% from February to 1,233 loans, while wholesale endorsements fell 2.3% to 824 loans. The gap between the two business channels is small but noticeable.
RMI client relations director Jon McCue said when asked about the impetus for such business growth it was largely driven by the dominance of the largest lenders in the sector.
“In this case, the largest retailers showed considerable gains, with 11 of the top 15 growing by 9% or more,” McCue told RMD. “Given that this category typically accounts for the vast majority of loans, it’s not surprising that retail popularity and wholesale declined slightly. However, wholesale volume fell only 2.3%, which is not a significant decline on a month-over-month basis.
When asked which pipeline is the biggest indicator of some volatility, McCue was quick to point to the number of cases being released.
“The number of cases has been rising steadily over the past three months, so it’s not surprising that the buildup of cases and applications will soon be over,” he said.
When asked about business lines that wholesalers might be able to tap into in the coming months, McCue said HECM to Procurement (H4P) loans could be an attractive option.
“I believe from a wholesale perspective this should be a great topic for traditional forward LOs looking to get more business,” he explained. “In fact, we have seen the number of H4P cases climb steadily over the past 3 months, with the number of cases in March being the highest since August 2023. The trend in this area is definitely correct, in speaking with LO , we found the plan receiving rave reviews from builders and some real estate agents.
That being said, business may not improve significantly in the first four months of the year starting in 2023.
“Recognition was lower than industry expectations, but we noted two months of growth, which can be attributed to an increase in the number of cases assigned for three consecutive months,” he explained. “Our H4P case volume also increased for three consecutive months. increase. That being said, this year was not where we wanted it to be from a volume perspective, but the data led us to believe we were in better shape than we thought.
McCue said the industry is getting stronger compared to business over the past few years, especially as H4P business continues to grow, and HECM-to-HECM refinances have declined.
“Adding more large legacy institutions will hopefully help us stay on that path, but even for them they face an uphill battle when they try to get buy-in from their teams,” he said.
