After a few months of drops, reverse mortgage volume increased by nearly 25% in June compared to the month prior. According to data compiled by Reverse Market Insight (RMI), home equity conversion mortgage (HECM) endorsement volume rose 24.7% for the month to 2,561 loans.
RMI cites the incorporation American Advisors Group (AAG) into the framework of Finance of America Companies (FOA), the parent company of industry lender Finance of America Reverse (FAR), as a main factor for the increase.
While largely “a lender story,” nine of the 10 tracked reverse mortgage industry regions also posted gains, while only around half of leading lenders did the same.
Reshaped roster
“[T]he acquisition of AAG by FAR looks to be settling out in the volume figures,” RMI said in its commentary. “While the month was more of a lender story than a regional one in our opinion, it makes sense given the past few months’ pattern that 9 of the 10 regions were up in June.”
The New York/New Jersey region posted a 76.8% increase in June to 122 loans, while month-over-month gains were also posted in the Great Plains (up 64.5% to 51 loans) and Southwest (up 45.5% to 275 loans) regions.
The real increase is on the lender side, however. FAR posted a 319% gain to 695 loans for the month, putting it in the top lender position for June. Cherry Creek Mortgage posted a 35.1% gain to 127 loans, marking a new high for the company.
Rounding out the lender gains are Liberty Reverse Mortgage (up 3.8% to 137 loans) and Longbridge Financial (up 2.9% o 245 loans).
Lender landscape
RMI President John Lunde said FAR could supplant AAG as the top lender in the industry, considering how things are shaping up.
“I think that’s the most likely path,” Lunde said. “When you combine a longtime number one wholesale originator with the longtime number one retail originator, [it’s likely] to create the new number one originator overall. Not guaranteed, but that’s a very logical expectation as of now.”
AAG recorded 57 endorsements in June, which was unexpected considering that it recorded zero endorsements in May. Lunde chalked the increase up to loans that had not made it out of the pipeline by the end of March, the AAG originator submission deadline.
Mutual of Omaha Mortgage also posted gains as the number two lender in terms of loans originated over the past 12 months. Outside of AAG and/or FAR, the company has had the highest monthly endorsement capacity since at least September 2022.
“Mutual of Omaha has a real advantage in the parent company and brand name that makes it a great fit for reverse mortgages,” Lunde said. “The entire organization is very oriented to the target audience of older households that are typically homeowners. I’d attribute their continued strong volume in 2023 to executing on that advantage, and look forward to seeing them continue to do so.”
Region and lender disconnect
When asked about the disconnect between lender and region gains in June, Lunde attributed it, at least in part, to recent mergers and acquisitions.
“It’s a function of the industry volume story being very distorted the past few months by what’s happening in two lender-specific situations with acquisitions (AAG and Cherry Creek),” he said. “That has created volume noise seen in the national and regional monthly volatility, so right now it makes more sense to be paying attention to the lender figures for a better read of where we’re at.”
When volume saw a sharp reduction in April and May, the concern stemmed from the loss of largest lender’s volume for that period, Lunde said.
“Now that we see that volume starting to reappear, it doesn’t mean we’re all clear,” he said. “We’re in a very similar place to December and January and will have to see how the industry continues to digest high interest rates and volatile financial markets in the wake of the bank failures earlier this year.”
