With declining applicaitons should lenders diversify their offerings?
Right now, the unsettling year-end numbers for reverse mortgage applications revealed. Once the excitement of the HECM endorsement surge before October 2nd has subsided and the HECM endorsements work their way through the system, a sobering perspective of the state of our industry becomes clear. Much like our stock market, we are experiencing the after effects of a rapid run up followed by market contraction.
There are two key yet distinct metrics that warrant our attention: FHA case numbers issued and endorsements. HECM loans are ‘endorsed’ when the loan is approved to be insured and the policy is attached to the file case binder. There is typically a 3-4 month delay from application to endorsement. However, FHA case numbers are an early indicator of market penetration and engagement. The final quarter of 2017 resulted in a meager 9,657 case numbers being issued for new applications. A similar surge in volume followed by a crash can be found in late 2013 when over 16,000 case numbers were issued in September in the rush to beat reduction of lending ratios or principal limit factors. The ensuing months or the final quarter of 2013 tallied only 13,778 issued FHA case numbers. 2017’s final quarter finished 30% below 2013. Even more sobering is the fact that we have to go back 14 years to 2003 to find a similar fourth quarter.
Industry professionals are faced with the choice to strive to build a larger base of qualified referrals from outside professionals or expand their product offerings…