According to data from HECM endorsement compiled by Reverse Market Insight (RMI) and HMBS issuance data from public Ginnie Mae data and private sources compiled by New View Advisors, the industry is seeing a shift in volume.
HECM Volume and Rate Increases
RMI leaders have been anticipating a decrease in volume due to a spike in the 10-year Constant Maturity Treasury (CMT) index late last year, which is now reflected in March’s endorsement data. Most top HECM lenders, except for HighTechLending, experienced a decline in activity. HighTechLending, on the other hand, saw a significant increase of 29.3% in loans.
The gap between Mutual of Omaha Mortgage and Finance of America (FOA) widened in March, with Mutual’s endorsements dropping slightly to 476 loans. South River Mortgage also experienced a decrease in performance.
With the release of reverse mortgage performance reports from the Federal Housing Administration (FHA), more insights have been provided to the industry. The decline in applications due to rate increases is now aligning with the decrease in endorsements.
Loan officers are observing a greater need for reverse mortgages, especially to cover expenses such as insurance premiums and to manage market volatility.
HMBS Issuance Growth
In March, HMBS issuance increased to $487 million, with FOA leading the way. Longbridge Financial and PHH Mortgage Corp/Liberty Reverse Mortgage also saw gains in issuance. Mutual of Omaha’s issuance levels decreased, while Reverse Mortgage Funding (RMF) issued no pools in March.
Despite the RMF portfolio remaining in a holding pattern, the HMBS market appears unaffected as capital markets remain healthy.
First-participation production of original HMBS pools also rose in March, with 21 first-participation pools issued out of 70 total pools.
Industry professionals should not expect a significant increase in HECM volume in the near future, as small changes month to month will be minimal.