HECM volume
HECM endorsements decreased by 6.1% to a total of 2,481 for February, showing improvement compared to the same month in 2023 and 2024, although still below January’s numbers. This improvement is attributed to the Federal Reserve’s actions in raising interest rates to combat inflation, as mentioned in RMI’s commentary accompanying the latest data.
Jon McCue, RMI’s director of client relations, explained that despite higher 10-year CMT rates compared to previous years, the impact on HECM volume has leveled out due to the rate environment stabilizing. The only segment significantly affected by rate increases is HECM-to-HECM refinances.
Regarding HMBS issuance, New View Advisors partner Joe Kelly noted that 2023 and 2024 started off weak, with potential benefits from lower rates observed at the end of 2024. The ongoing implementation of HMBS 2.0 could further impact issuance, especially with potential changes at HUD/FHA.
Major HMBS issuers like Finance of America, Mutual of Omaha Mortgage, and PHH Mortgage Corp. experienced declines in February, attributed to the more favorable rate environment in January and a low business day count in February.
Ellington Financial’s successful proprietary reverse mortgage securitization was highlighted as a key liquidity tool for the industry, essential for proprietary loans amid low HECM volume. Kelly emphasized the necessity of a lower upfront mortgage insurance premium on the HECM program for volume recovery.