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   James E. Veale, CPA (Inactive), MBT

   May 1, 2024 at 5:32 pm

   In the prior 20 fiscal years we have never experienced a fiscal year to date with total HECM endorsements as low as we are right now. At this time last fiscal year (the second worst fiscal year in the last 20 fiscal years for HECM endorsements as of 9/30/2023), there were 19,982 HECM endorsements for the first seven months of fiscal year 2023. This fiscal year that total has dropped by 4,652 HECM endorsements (or 23.3%) to just 15,330 (or from an average of 2,855 endorsed HECMs per month to just 2,190 per month). Last month that average for 6 months was 2,204 endorsed HECMs per month, then came another poor month for HECM endorsements (i.e., below that average at just 2,105 for the month of April 2024) and we experience another drop in average HECMs endorsed this month.
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   Right now the average HECMs endorsed per month is screaming that we had better be ready for around 26,300 total HECM endorsements for this fiscal year, making this fiscal year the worst fiscal year for total HECM endorsements in 21 fiscal years. It would take a literal miracle to see HECM endorsements exceed the current worst fiscal year for HECM endorsements, 2019, which had just 31,274 HECM endorsements.
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   So despite all of the wonderful things heard about referral sources meaning so much to the industry, the facts are, they are not influencing our continuing tailspin. Will things turn around in fiscal year 2025? They may if 1) interest rates drop substantially this fall and continue to do so for most of the first eight months of fiscal 2025 without substantial interest rate increases, 2) HUD substantially increases PLFs, and/or 3) home price appreciation climbs much more rapidly than it is right now. Based on reasonable expectations for next fiscal year be prepared for more of the same. The reason is that if this is an election year, what would happen to make next year any better? Could it get worse? In a binary world, the answer is….
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   Despite gloom and doom, this is the year I have chosen to return as a reverse mortgage originator. While some in our own industry are falsely claiming that the term “reverse mortgage” is slang, the truth is there is much to say positive about this much maligned term but there is no reason to throw it in the face of those who view it negatively. By the way, both Congress and HUD refer to HECMs as reverse mortgages because by the legal definition of reverse mortgage in the 15th title to the United States (federal) Code of Laws at Section 1602(cc), they clearly are.

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