Key facts
- HECM endorsements fell 6.7% to 1,790 in September, the lowest since April 2020.
- HMBS issuance declined 17% in September to $446 million.
- Finance of America was the top HECM lender in September with 408 endorsements.
- Finance of America led HMBS issuers in September with $175 million in volume.
- Through the first three quarters, Finance of America led HECM endorsements with 3,838.
Federally insured reverse mortgage originations continued to decline in September, with Home Equity Conversion Mortgage (HECM) endorsements falling 6.7% from August to 1,790, the lowest level since April 2020. This marks a significant drop from the approximately 3,000 submitted applications per month seen from May through July, as many applicants withdrew from lender pipelines.
HECM Mortgage-Backed Securities (HMBS) issuance also saw a substantial decrease, dropping 17% from the prior month to $446 million in September. This decline was accompanied by an increase in the number of HMBS pools issued, from 65 in August to 70 in September.
Finance of America (FOA) remained the leading lender for HECM endorsements in September with 408, and also led HMBS issuance with $175 million. Through the first three quarters of the year, FOA widened its lead in HECM endorsements with 3,838, followed by Mutual of Omaha (3,709) and Longbridge Financial (3,151).
Analysts attribute the slowdown in originations to the product becoming "so safe" and the current interest rate environment. Dan Ribler, vice president of capital markets and strategy at Longbridge, noted that cooler inflation data could lead to the Federal Reserve holding rates steady, but the 10-year Treasury yield remains at high levels, impacting new issuance.