After a rough March for home equity conversion mortgage originations, April’s numbers became even more dire, according to the latest statistics from Reverse Market Insight. Just how bad did the home equity conversion mortgage (HECM) market get in April 2018? RMI reports a 22.2 percent month-over-month drop in HECM originations in April.
That amounted to only 3,345 HECM originations from FHA-approved mortgage lenders in April, according to RMI data. For March, that number was 4,300; for January 2018, it was 6,313. January also marked the highest reverse mortgage volume since 2011. January also saw 48 new lenders enter the reverse mortgage lending field. Now, however, the market has clearly taken a turn for the worse.
“HECM volume is seriously hurting after the October 2, 2017, changes from the FHA,” stated RMI’s release. That is referring to changes instituted last fall that lowered principal limits and imposed a new mortgage insurance premium structure.
All 10 regions tracked by RMI saw significant monthly declines during April. The New York/New Jersey region suffered a 17 percent drop in HECM originations for the month. The Pacific/Hawaii region fared best with 964 HECM originations, but that’s still down considerably from March’s total of 1,204 (to say nothing of January 2018’s 2,047).
American Advisors Group was the top originator of reverse mortgages for April 2018, totaling 890 for the month. However, that total was down from 1,158 in March and 1,218 in January. Finance of America Reverse LLC came in second with 314 originations (compared to 390 in March and 636 in January).
According to RMI, “The question now is whether this is the bottom for endorsements, and based on funding data collected through our industry data repository, I’d suspect we’re close—but might not be there yet. Applications appear to have bottomed in December, but with fundings continuing to make lower lows in March, it’s too early to definitively say we’re on the road to recovery yet.”