A Time for Measured Optimism?

Shannon Hicks June 10, 2018 3


ePath 100K RM leads

Despite challenges there is reason for measured optimism

reverse mortgage newsIf you’ve been originating reverse mortgages for longer than a few weeks or paying attention to recent developments you’ve probably felt the impact of our collective dependence on a singulargovernment-insured loan and heard the dire warnings of a continued decline in loan volume. But not unlike most drastic proclamations of doom and gloom the truth lies between the extremes.

All which brings us to the question- is the reverse mortgage or HECM market in a continued downward trajectory? The number of FHA case number assignments issued for new HECM applications serves as an accurate leading indicator of consumer interest in the loan. The average number of HECM case numbers issued in both 2016-17 averaged nearly 7,000 per month.  Predictably case numbers plummeted after last September’s rush to beat October 2nd HECM cutbacks in the wake of a record 20,408 new applications. Yet despite this aberration today application volume is steadily climbing an average of 9 percent in the first 3 reported months of 2018. Interestingly, if that trend were to continue

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3 Comments »

  1. The Positive Realist June 11, 2018 at 11:14 am - Reply

    Here we go once again with the optimism business. The optimists of 2010 were leading in cheers for predictions of 100,000 endorsements for fiscal 2011 at the 2010 NRMLA Convention. We all know how that worked out.

    But leave it to the optimists, on the cover of the November-December 2013 issue of the NRMLA Reverse Mortgage magazine there it is written for posterity, 300,000 HECMs endorsed in fiscal 2018. (I think we will miss that one as well.)

    We what is optimism saying today? The endorsement count for May 2018 “might signal the nadir of the post-October 2 slump.” See

    https://reversemortgagedaily.com/2018/06/06/data-points-to-potential-bottom-for-reverse-mortgage-market-plunge/

    I feel like James that the nadir is yet to be seen. As I often say: “A single point does not indicate a trend.” If a single point did indicate a trend, the drop in case number assignments for the month of December 2017 would have meant lower case number assignments thereafter. That was not the case then nor is the single count for endorsements for May 2018 indicative of a rise in endorsements for the rest of the year.

    Now most will look at what I write as pessimistic; however, I believe that unless PLFs are dropped at the beginning of fiscal 2019, our average monthly endorsement production for fiscal 2010 will be higher than the average endorsement production for the six months ended September 30, 2018.

  2. John A. Smaldone June 11, 2018 at 11:44 am - Reply

    Shannon,

    Good presentation as usual! My friend Jim Veale does a great job in pointing out the numbers and the statistics!

    I don’t agree with Jim on when he says, “Any HECM application without a case number assigned by now will not result in a HECM that will be endorsed in fiscal 2018″!

    I am almost positive we have another 30 days before we realize that to become a reality!

    other than that, good video Shannon, great comment Jim!

    John A. Smaldone
    http://www.hanover-financial.com

  3. Robin Faison June 13, 2018 at 7:54 am - Reply

    Does not matter. But, we originators, are realizing the impact. Not just in volume but in revenue. Our own.
    They really did it to all of us this time.
    My total commissions are a fraction of what they were this time last year.
    That is the reality.

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