In July, the reverse mortgage industry saw a split in key performance indicators, as reported by industry analysts.
Home Equity Conversion Mortgage (HECM) endorsements rose by 8% from June to July, totaling 2,274, aligning closely 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, with 80 pools issued. This information is based on data from Ginnie Mae and private sources compiled by New View Advisors, as detailed here.
HECM data shows fluctuation
RMI’s HECM Lenders noted that recent months of HECM endorsement data have been like a “yo-yo,” with numbers rising and falling. Analysts believe that more data is needed to establish a clear trend for the industry’s performance.
Jon McCue, director of client relations at RMI, mentioned that FHA case number assignments hinted at last month’s increase, with previous months showing high case numbers leading to the rise in July endorsements.
While some top lenders experienced declines in endorsements, others like Guild Mortgage, Movement Mortgage, CrossCountry Mortgage, CMG Financial, and Guaranteed Rate (now Rate) saw significant year-to-date growth in HECM volume due to strategic investments and acquisitions.
As discussions about mortgage rate decreases gain traction, potential impacts on HECM business, particularly HECM-to-HECM (H2H) refinances, are being closely monitored.
HMBS issuance declines
New View Advisors characterized the drop in HMBS issuance in July as “sharp,” with securitizations remaining near historic lows since 2010 for the Ginnie Mae-backed program.
The development of “HMBS 2.0,” a new securities issuance program by Ginnie Mae, is expected to boost HMBS issuance substantially by financing mandatory buyouts, according to Recursion.
Despite the decline in issuance levels, the overall health of the HMBS program remains strong, with Finance of America leading in July issuance followed by Longbridge Financial, PHH Mortgage Corp., and Mutual of Omaha Mortgage.
Michael McCully from New View mentioned that a potential reduction in rates could positively impact industry origination volume and HMBS issuance, depending on the magnitude of the rate drop.
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