Our Industry’s Trends & Outlook

Shannon Hicks November 19, 2012 1

Interview with RMI’s John Lunde

We interviewed our industry’s top analyst John Lunde who is founder and President of Reverse Market Insight. RMI gathers and makes sense of industry data, market trends and much more. List as we discuss overall loan volumes, pull-through rates and our future.

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  1. James E. Veale, CPA, MBT November 21, 2012 at 2:29 pm - Reply

    It now takes 50% more FHA Case Numbers to create the same number of endorsements as it did on October 1, 2007. The conversion rate from application to endorsement was over 95.9% at that time (just five years ago). The current conversion rate is 64.1% (on an annualized basis using a four month rule of thumb for the period from case number assignment to endorsement). Those who use quarterly conversion rates are seeing even lower conversion rates, well under 60%.

    How are case numbers growing? There has been no objective evidence of that in over four fiscal years. Here are the total Case Numbers Assigned during the 12 month periods ended September 30:

    2009 162,617
    2010 96,971
    2011 95,691
    2012 83,474

    In which year was there an increase over the prior year. Case number assignments have trended down now for quite some time. These numbers come directly from the HUD monthly issued Single Family Outlook reports available to the international Internet community.

    While Mr. Lunde is precisely right that the unique market avenue available to large international depository banks based on foot traffic has been lost to the industry, the originators with those banks before their departure from the industry have generally stayed in the industry and just moved to different lenders. So their skill, experience, expertise, and origination acumen have NOT been lost to the industry.

    We all like to think we are in a thriving and vibrant industry and want to find things to blame when the facts do not match our dreams. We have already heard about hurricane Sandy, financial assessment, bad appraisals, and soon to be announced HUD measures for shoring up (?) the losses in the HECM portion of the MMI fund. BUT the basic truth is, our industry is in a tailspin without much evidence of pulling out even yet.

    As a CPA, numbers speak; explanations puff and distort. Like others have stated, it seems the modus operandi of call centers and their relative strong growth in our industry are responsible for some part of the reduced production. We have many issues to face during this fiscal year but one thing is very evident at this juncture, the industry as a whole will not be overwhelmed with endorsements over the next 10 plus months.

    We have much to do to turn this aircraft carrier around but for now have a wonderful Thanksgiving.

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