HECM volume
HECM endorsements experienced a 6.1% decline on a per-unit basis, totaling 2,481 for February. While this is an improvement from the figures in the same month of 2023 and 2024, it still falls below the numbers recorded in January.
The endorsement landscape has shown signs of improvement since the Federal Reserve began raising interest rates to combat inflation, as noted in RMI’s commentary accompanying the latest data.
Jon McCue, RMI’s director of client relations, attributed the differences in endorsement numbers to fluctuating rates, emphasizing that the current rate environment has stabilized compared to previous years.
According to McCue, the segment most affected by rate hikes is HECM-to-HECM refinances, with businesses adapting to the new rate landscape following the bursting of the refinancing bubble.
Discussing the February data in comparison to previous years, McCue anticipated a larger drop in endorsements due to rising rates since October 2024. However, he believes that the impact of rate fluctuations on endorsements has lessened compared to previous years.
HMBS issuance
Comparing issuance data from the past two years, Joe Kelly of New View Advisors noted a weak start in 2023 and 2024. Lower rates observed at the end of 2024 may benefit issuance in the first half of the year, but the sustainability of this trend remains uncertain.
Regarding the potential implementation of HMBS 2.0, Kelly highlighted the importance of the program for increasing liquidity, especially in light of potential changes at HUD/FHA beyond 2025.
All major HMBS issuers recorded declines in February, with Finance of America, Mutual of Omaha Mortgage, and PHH Mortgage Corp. all posting decreased issuance figures, attributed to the higher rates earlier in the year and a lower business day count in February.
Kelly emphasized the significance of proprietary reverse mortgage securitization for the industry’s overall health, especially in the absence of significant HECM volume. He also stressed the need for a lower upfront mortgage insurance premium on the HECM program to stimulate volume recovery in 2025.