The reverse mortgage industry’s key performance indicators split in July, according to industry analysts.
The number of Home Equity Conversion Mortgage (HECM) approvals increased by 8% from June to July to a total of 2,274, a decrease of federal housing administration (FHA) HECM Case Number. This is based on Reverse Market Insights (Rocky Mountain Research Institute).
Meanwhile, issuance of HECM-backed securities (HMBS) fell by $47 million in July, to a total of $450 million for the month. A total of 80 pools were issued, 6 fewer than in May and June. This is based on Ginnie Mae Compilation of information and private sources new perspective consultant.
HECM data is now a “yo-yo”
RMI’s HECM Lenders report describes HECM endorsement data over the past few months as “yo-yoing,” considering numbers have gone up and down over the past few months. Analysts said it may take another month of data to establish a firmer trend in the industry’s performance.
But Jon McCue, director of client relations for Rocky Mountain Institute (RMI), said the FHA’s case number assignments did help shed light on last month’s increase.
“I would say, yes, the case numbers predicted that jump because every month from February to May was well over 3,000 cases, with March and April leading the way,” McCue said. house lineReverse Mortgage Daily (RMD). “This typically coincides with the timing of endorsements in July.”
Four of the top 10 lenders in the space have seen endorsement volumes decline month over month, but looking further down the list, McCue noted there have been several examples of significant growth in HECM deal volume so far this year.
“guild mortgage Up more than 1,700%, but that’s mostly because they didn’t do much last year until the acquisition Cherry Creek Mortgageso a lot of that has to do with this acquisition and other acquisitions,” he said. “Liquid Mortgage Another company has a similar story, and now their stock is up 257%, given that the team moved there.
Cross-border mortgages Year-to-date growth also reached 171% with new reverse mortgage business efforts and additional team members, while China Merchants Finance HECM grew 500% in the first seven months of this year, proving that the company has been making greater investments in this area.
at last, Guaranteed rate – Recently renamed speed ——”They added new leadership last year and now the stock price is up 870%, which is also news,” McCue said. “All of this will tie into the first seven months of 2024 [the same period in] By 2023, one could see the impact of the investments made by these companies.
With talk of falling mortgage rates increasing in recent days, if that scenario materializes, it could also have an impact on HECM’s business this year.
“As with any mortgage, falling interest rates will make it easier for companies to qualify more borrowers, but beyond that, it will be very interesting to see what impact this may have on HECM to HECM (H2H) refinances,” McCue said. .
In-person refinances have been a lower source of business since interest rates surged from historic lows. In the low interest rate environment caused by the epidemic, H2H refinancing accounted for as much as 50% of HECM’s total business, and then declined significantly in the following years.
HMBS issuance drops ‘sharply’
New View Advisors described July’s drop in issuance as “sharp,” as HMBS securitization in the Ginnie Mae-backed program remains near historic lows not seen since 2010.
One source of hope is the development of “HMBS 2.0,” a supplemental securities issuance program for which Ginnie Mae recently released a term sheet and for which industry participants recently submitted comments.
“Once implemented, HMBS 2.0 should significantly increase HMBS issuance by funding most compulsory acquisitions, which last month amounted to just under $500 million, according to data. recursion”, New View said in comments accompanying the release data.
Judging from the issuer ranking, American Financial (FOA) topped the list again in July, with issuance volume of $139 million, but still $20 million below June levels. Longbridge Financial It ranked second at $104 million, with a smaller decline of $4 million this month.
PHH Mortgage Company This was followed by $98 million, followed by Omaha Mortgage Mutual $63 million. former reverse mortgage financing The RMF portfolio, now controlled by Ginnie Mae, once again did not issue any pools.
New View partner Michael McCully said the overall HMBS scheme was currently quite healthy despite lower activity in the issuance market.
“[Low issuance levels and HMBS program health are] It’s not really relevant,” McCully said. “HMBS continues to perform well.”
But he said a rate adjustment could have an immediate impact, assuming the reduction is large enough.
“Once the issuance lag between purchasing customers and closings is taken into account, a significant reduction in the 10-year Treasury rate will help industry issuance volumes and therefore HMBS issuance,” McCully said.
