In July, the reverse mortgage industry saw a mixed performance in key indicators, as reported by industry analysts.
Home Equity Conversion Mortgage (HECM) endorsements rose by 8% from June to July, totaling 2,274 and closely aligning with Federal Housing Administration (FHA) HECM case numbers. This data was compiled by Reverse Market Insight (RMI) and can be found here.
On the other hand, HECM-backed Securities (HMBS) issuance dropped by $47 million in July to a total of $450 million for the month. There were 80 pools issued, six fewer than in May and June. This information is based on data from Ginnie Mae and private sources compiled by New View Advisors.
HECM data is a ‘yo-yo’ right now
Analysts at RMI described the recent months of HECM endorsement data as a “yo-yo” due to fluctuating numbers. They believe that more data is needed to establish a clear trend in the industry’s performance.
Jon McCue, director of client relations at RMI, mentioned that the increase in FHA case numbers in previous months hinted at the rise in July endorsements. He stated, “Case numbers predicted this jump given the trend in previous months.”
While some top lenders experienced declines in endorsements, others showed significant year-to-date growth in HECM volume. Companies like Guild Mortgage, Movement Mortgage, CrossCountry Mortgage, CMG Financial, and Guaranteed Rate (now Rate) have all seen substantial increases in HECM business compared to the previous year.
The potential decrease in mortgage rates could impact HECM business, especially in terms of H2H refinances, which have been low since rates rose from historic lows.
HMBS issuance drops ‘sharply’
New View Advisors noted a sharp decline in HMBS issuance in July, with securitizations remaining near historic lows since 2010 for the Ginnie Mae-backed program.
There is hope for increased HMBS issuance with the development of “HMBS 2.0,” a new securities issuance program that Ginnie Mae recently introduced a term sheet for. Once implemented, HMBS 2.0 is expected to boost HMBS issuance significantly by financing most mandatory buyouts.
Despite the drop in issuance levels, the HMBS program overall remains healthy, according to New View Advisors. Issuers like Finance of America, Longbridge Financial, PHH Mortgage Corp., and Mutual of Omaha Mortgage maintained their positions in the market.
A reduction in rates could have a positive impact on industry origination volume and HMBS issuance, assuming the drop is significant enough to stimulate activity.
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