Key facts
- HECM loan endorsements decreased 5.7% in August to 1,919, the lowest August total in years.
- Finance of America (FOA) led HECM endorsements with 433 loans, followed by Mutual of Omaha (395) and Longbridge Financial (357).
- The top three lenders held a combined 62% market share for HECM endorsements in August.
- HMBS issuance rose 16% month-over-month to $537 million in August.
- FOA, Longbridge, and Mutual of Omaha accounted for 90% of HMBS volume in August.
- Atlantic Avenue Mortgage led HECM broker rankings with 994 endorsements over a 12-month rolling period.
Home Equity Conversion Mortgage (HECM) origination volume declined in August, marking the lowest total for the month in recent years. A total of 1,919 loans were endorsed, a 5.7% decrease from July, according to a report from HECMWorld.com based on data compiled by Reverse Market Insight.
The market continues to be dominated by a few key players. Finance of America (FOA) led in endorsements with 433 loans, despite a 13.2% decrease from the previous month. Mutual of Omaha Mortgage followed with 395 endorsements, a 3.7% increase, and Longbridge Financial was third with 357 endorsements, up 1.7%. Together, these three lenders held approximately 62% of the HECM market share in August.
Year-to-date, HECM endorsements have fallen 10.3% compared to the same period last year. Other notable lenders in August included Goodlife Home Loans, Fairway Home Mortgage, South River Mortgage, and Guild Mortgage. Luminate Bank showed significant growth, with its endorsements up 48% from July, partly due to an acquisition of select assets from First State Mortgage Services.
Industry analysts suggest that proprietary reverse mortgages, senior-focused HELOCs, and home equity investments are increasingly competing with and potentially surpassing HECM production. Michael McCully of New View Advisors noted that the securitization market's stability and investor confidence are crucial for proprietary product growth. He also highlighted that offering both proprietary products and HECM has been a lifeline for larger players in a shrinking HECM industry.
Despite the dip in originations, secondary market activity, measured by HECM Mortgage-Backed Securities (HMBS) volume, saw an increase. Total issuance rose 16% from July to $537 million in August, a 7% increase year-over-year. The top three issuers—FOA, Longbridge, and Mutual of Omaha—accounted for 90% of this HMBS volume. FOA led HMBS issuance with $257 million, while Longbridge issued $135 million and Mutual of Omaha $94 million. The shrinking number of players in the secondary market is attributed to the significant infrastructure required to manage HMBS business, which can become economically unviable for those not growing their business.
In June, Atlantic Avenue Mortgage led HECM broker rankings with 994 endorsements over a 12-month rolling period, followed by loanDepot with 464 and Caliver Beach Mortgage with 359. Dan Ribler of Longbridge Financial commented on the U.S. debt problem, noting that refinancing maturing debt at higher rates could add significant annual interest costs.