Very similar to the remainder of 2024, key efficiency metrics for the reverse mortgage business went on one thing of a curler coaster journey for the ultimate month of the yr. That is set in opposition to a backdrop of adjustments, with a new Dwelling Fairness Conversion Mortgage (HECM) restrict that turned efficient Jan. 1 and a brand new complementary issuance program with a cloudy implementation timeline.
HECM endorsements elevated by 9.1% from November to December 2024, with 2,626 loans endorsed final month, in keeping with knowledge compiled by Reverse Market Perception (RMI).
In the meantime, HECM-backed Securities (HMBS) issuance decreased by $8 million through the month for a complete of $575 million in November. There have been 75 swimming pools issued, 4 greater than in November, in keeping with Ginnie Mae knowledge and personal sources compiled by New View Advisors.
HECM quantity has year-end spike
Six of the ten geographic areas tracked by RMI noticed will increase in December, with the Southeast/Caribbean area exhibiting a 42% leap to 724 loans. Not solely was this the highest spot for the month of December, nevertheless it additionally pushed the area to the No. 1 place for the yr, RMI famous.
RMI President John Lunde advised RMD that whereas 2024 completed its endorsements on a excessive word, he could be “stunned if we constructed farther from there within the new yr.”
Equally, six of the highest 10 lenders additionally posted positive aspects in December. The largest top-line takeaway based mostly on retail endorsements is that Mutual of Omaha Mortgage additional cemented its place because the business’s No. 1 retail reverse mortgage lender. In December alone, the corporate noticed a 40.9% spike over the prior month to 641 loans. This bested Finance of America (FOA) by almost 100 loans in December.
However FOA has additionally been extra closely emphasizing its proprietary product suite that features HomeSafe Second, its closed-end, second-lien, private-label reverse mortgage. Lenders don’t report their proprietary origination knowledge alongside their HECM endorsements.
When requested concerning the competitors between Mutual of Omaha and FOA, Lunde famous that competitors general stays fierce and that a number of contenders stay within the operating for the general lead place on the business leaderboard.
“We gained’t have a real ‘retail’ perspective via December for a month or extra (in our HECM Originators e-newsletter), however our most up-to-date figures via October on that entrance present FOA persevering with to push for that high retail spot,” Lunde stated. “On an general foundation together with wholesale it’s even tighter with Longbridge Monetary additionally near touching distance.”
FOA and different business leaders additionally posted positive aspects over the prior month, together with Longbridge, Fairway Unbiased Mortgage Corp., Plaza Dwelling Mortgage and HighTechLending.
A few of this knowledge stems from a extra favorable mortgage fee surroundings that began to emerge within the closing months of the yr — however the second didn’t final. Charges stay elevated past what both the ahead or reverse mortgage industries wish to see, which is according to the ingredient that business professionals pegged because the largest enterprise problem of 2024.
Lunde additionally famous that the traits for product distribution seem favorable for the time being.
“I actually like what’s occurring with broader distribution forming the inspiration of future quantity at Mutual of Omaha but in addition at Fairway, Guild Mortgage, loanDepot, Motion Mortgage, and so on. the place they’re actually harnessing the larger ahead footprint to drive reverse loans,” Lunde stated.
However there have been additionally different constructive indicators. A current have a look at knowledge from October that features each wholesale and retail endorsements noticed HECM case numbers attain their highest degree in two years, and the rise in December endorsements could be tied to those increased case numbers.
However challenges, together with charges, stay. There are additionally most of the longtime points the reverse mortgage business has had with product training, distribution and client sentiment.
HMBS issuance leaves business a ‘lump of coal’
FOA as soon as once more led the pack of HMBS issuers in December, including $28 million over November’s totals to hit $184 million. In the meantime, Longbridge misplaced $10 million in issuance to complete December at $139 million, adopted by Mutual of Omaha ($106 million) and PHH Mortgage Corp. ($96 million).
In its evaluation of the issuance knowledge, New View identified that the 2024 complete “was the bottom HMBS issuance yr for the reason that program’s infancy in 2008,” and that after subtracting tail issuance, “2024 HMBS new origination quantity totaled simply $3.95 billion.”
However New View accomplice Michael McCully stated that doesn’t imply that the issuance market is in poor situation.
“Liquidity and execution stay pretty wholesome and there may be optimism HMBS 2.0 will present further capital aid to the business,” he advised HousingWire’s Reverse Mortgage Each day (RMD).
HMBS 2.0 growth started at Ginnie Mae roughly one yr in the past. It’s designed to bolster liquidity within the secondary reverse mortgage market, together with via a discount within the HMBS pool dimension to 95% of the mortgage’s complete unpaid principal steadiness (UPB).
This transfer is designed to “create an extra financial incentive to guard Ginnie Mae and taxpayers in opposition to a decline in collateral worth,” the corporate defined when asserting the initially proposed time period sheet final summer time.
Ginnie Mae issued a remaining time period sheet in November, however an implementation timeline is at the moment unsure and additional clouded by the upcoming switch of energy to the second Trump administration on Jan. 20. However on the subject of getting the ball rolling on the brand new program, McCully stated sooner is best.
“No matter its affect on HMBS quantity, the earlier the higher for the well being of the business, particularly these HMBS issuers with extra seasoned books,” he defined.
The December issuance knowledge additionally confirmed that HMBS issuers are persevering with to reap the benefits of a coverage that enables for pool sizes as small as $250,000. In December, 19 swimming pools of lower than $1 million have been issued, including $11.6 million of UPB to the equation that might not be there in any other case.
Editor’s word: This story has been up to date with perspective from RMI president John Lunde.
