March Reverse Mortgage Volume Hits Highest Monthly Total in Over 10 Years, HMBS Issuance Remains Healthy

Those who follow the regular performance metrics of the reverse mortgage industry know that 2021 volume was pushed higher by a record December. What followed in January actually managed to reach even higher, before a slight decline occurred in February. In March, however, industry activity hit a level not seen in more than a decade.

Home Equity Conversion Mortgage (HECM) approvals rose in March 2022 by 26.3% to 6,510 loans, a volume level not approached since March 2011. This is according to the data. compiled by Reverse Market Insight (RMI). Industry volume in March 2011 reached 7,306 units, and while the March 2022 figure is reasonably far from that threshold, the new data points to an even stronger month relative to recent industry health.

New home equity conversion (HECM) mortgage-backed securities (HMBS) production neared another record high in March, again hitting nearly $1.4 billion in HMBS issuance in the thirteenth month of the period after the London Interbank Offered Rate (LIBOR). ) “time.” As previously reported, the $13.2 billion total of HMBS issued in 2021 easily surpassed the previous industry record of $10.8 billion set in 2010, according to public data from Ginnie Mae and private sources. compiled by New View Advisors.

High Volume of Reverse Mortgage Approvals

While it’s not yet clear how the new March data breaks down among the different types of loans, the various elements related to rising interest rates and pricing realities are likely contributing to play into this spike in volume. suddenly according to Jon McCue, director of customer relations at RMI.

Jon McCue

“With one-month volume not seen since March 2011, our industry jumped in March 2022 with 6,510 loans,” McCue told RMD. “At this time, it is too early to tell how much of this volume is from HECM to HECM (H2H) refinances. So the questions other than that might be whether there has been a push in the industry to close loans before rates rise.

Other questions include whether or not there might have been a delay in endorsements as lenders decided to close as many loans as possible before a rate increase, or whether current market conditions (including a surge in inflation) are of broader public interest. in reverse mortgages, adds McCue.

“All of this should become much clearer in the coming weeks,” he explains.

While the oft-discussed H2H refinance boom has shown no signs of outright dissipation, natural questions arise as to the impact of rising rates on the pace of refinance volume seen by the industry. for much of the past year. The nature of the rate hike may muddy the waters a bit on the refi front, McCue says.

“Our industry has done a fabulous job in the first 3 months of the year with volume, but with the 10-year CMT rate rising, one can assume there could be some turbulence ahead, especially for those looking to do H2H,” he explains. “Now is the perfect time to shift business models to new reverse mortgages and H4P to continue to grow volume in the future.”

Ranking of Regional Reverse Mortgage Endorsements and Lenders

All 10 regions of the country tracked by RMI saw volume gains, but those gains were primarily led by the New York/New Jersey region, as opposed to the normal Southern California focus. That region jumped more than 50% ahead of February totals to 206 loans, followed by New England up just under 41% to 145 loans. The Mid-Atlantic jumped just over 40% to 272 loans, while the Southeast/Caribbean region jumped 38.4% to 1,075 loans.

Among the major lenders in the sector, eight of the top 10 posted gains over February’s total volumes. Finance of America Reverse (FAR) rose 62% to 562 loans, overtaking second place in the rankings.

Other major risers in the top 10 include Fairway Independent Mortgage Corp. (+38.7% to 265 loans); Liberty Reverse Mortgage (+30% to 503 loans); and American Advisors Group (AAG, +30% to 1,944 loans).

Stable HMBS emissions, at the rate of the last few months

March’s HMBS issuance was flat compared to February data, according to New View.

“[HMBS] issuers continued their record pace in March 2022, again issuing nearly $1.4 billion in new HMBS, again setting near a record for new initial loan pools for the sixth consecutive month,” New View said. . “Refinancing activity remains strong.”

Last month, when the HMBS emission figures for February were similar to those recorded in March, RMD asked New View whether or not a trend could emerge in the data. At that time in early March, New View partner Michael McCully explained that unlike reverse mortgage approval data, establishing a firm trend for HMBS issuance requires more time in the market. year to pass, he explains.

“Until a majority of 2022 is on the books, it is difficult to project volume for the year, particularly because this is largely a HECM-to-HECM refinance,” said McCully explained in early March. “Low rates and concurrently high home values ​​have contributed to increased volume since 2020. Rising rates and/or falling home values ​​would likely slow originations in general and refinance volume in particular.”

HMBS’ original output is “remarkably consistent” in 2022 so far, according to a commentary accompanying the new data from New View. There is also a noticeable difference between emission levels seen a year ago, according to the commentary.

“March production of new pools of initial loans totaled $1.13 billion, just above February’s $1.12 billion and consistent with January’s record high of $1.18 billion, 1.14 $1 billion from December, $1.08 billion from November, and $1.07 billion from October,” New View explained in its commentary. “About $671 million in new pools of initial loans were issued a year ago, in March 2021.”

Read the HECM Lenders report on RMI and the HMBS Issuance report on New View Advisors.

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