The
reverse
mortgage
industry
is
pressing
ahead
with
a

chance
at
lower
interest
rates
later
this
month.
While
there
were
signs
of
weakness
in
performance
metrics
in
August,
there
are
also
commensurate
signs
of
encouragement,
according
to
industry
experts.

Home
Equity
Conversion
Mortgage
(HECM)
endorsements
fell
by
3.3%
from
July
to
August,
with
the
total
of
2,200
falling
reasonably
in
line
with


Federal
Housing
Administration
(FHA)
HECM
case
numbers
that
posted
their
own
gains
in
July.
This
is

according
to
data
compiled
by


Reverse
Market
Insight
(RMI).

Meanwhile,
HECM-backed
Securities
(HMBS)
issuance
increased
by
$44
million
during
the
month
for
a
total
of
$494
million
in
August.
There
were
77
pools
issued,
three
fewer
than
in
July.
This
is
according
to


Ginnie
Mae
data
and

private
sources
compiled
by


New
View
Advisors.

HECM
volume
bumpiness

Last
month,
RMI
President
John
Lunde
referred
to
the
monthly
movements
in
HECM
endorsements
as
a
“yo-yo”
that
has
traded
off
between
gains
and
losses.
That
trend
continued
last
month,
with
the
8%
gain
in
July
followed
by
a
3.3%
reduction
in
August.

Despite
that
loss,
however,
July’s
FHA
HECM
case
number
assignments
—
which
often
serve
as
a
predictive
factor
for
future
endorsements
—
trended
upward.
The
new
borrower
share
jumped
14.5%
to
2,840,
HECM-to-HECM
refinances
increased
20.8%
to
383
and
purchases
rose
by
more
than
50%
to
215
cases.

In
terms
of
volume
levels,
however,
only
four
of
the
top
10
lenders
managed
to
post
gains
compared
to
July.


Finance
of
America
(FOA)
saw
7.3%
growth
to
509
loans
and
maintained
its
industry
leadership
position.


Guild
Mortgage
(10.2%),


Mutual
of
Omaha
Mortgage
(4%)
and


Longbridge
Financial
(0.7%)
also
posted
gains.

In
terms
of
monthly
totals,
Mutual
of
Omaha
outperformed
industry
leader
FOA
by
eight
loans
(517
to
509,
respectively).
But
on
a
year-to-date
basis,
FOA
maintains
a
lead
with
6,640
loans
to
Mutual
of
Omaha’s
6,203.

When
asked
what
he
made
of
the
industrywide
decline
last
month,
Lunde
explained
that
case
numbers
helped
to
predict
it.

“The
decrease
overall
was
a
predictable
result
of
low
case
number
issuance
volume
the
past
several
months,
with
May
and
June
particularly
lagging,”
Lunde
told

HousingWire’s
Reverse
Mortgage
Daily
(RMD).
“Now
that
we’ve
seen
July
case
numbers
bounce
in
response
to
lower
expected
rates,
we
can
hope
Q4
has
better
tidings
for
us
on
endorsement
volumes.”

As
the
rate
environment
improves,
and
with
the
improvement
in
case
number
data
in
July,
the
yo-yo
pattern
is
likely
to
continue,
he
added.

“We
saw
a
30
bps
reduction
in
10-year
CMT
from
June
30
to
July
31
and
a
bit
of
a
boost
in
case
numbers
issued
in
July
partly
resulting
from
that,”
he
said.
“Given
the
further
35
bps
we’ve
seen
that
key
rate
drop
through
Sept.
5,
we’d
hopefully
see
further
volume
gains.”

When
asked
whether
it
was
possible
that
the
industry
is
reacting
preemptively
to
the
possibility
of
a
rate
cut,
Lunde
didn’t
quite
see
it
that
way.

“I
think
everyone
is
expecting
rate
cuts,
but
I’d
say
the
reaction
is
more
to
the
already
occurring
declines
in
the
10-year
CMT
rather
than
the
anticipated
drops
in
Fed
Funds
rate,”
he
said.
“So,
on
that
basis
I’d
say
no,
it’s
not
preemptive.
Whether
the
10-year
CMT
is
itself
reacting
preemptively
is
always
a
fun
discussion,
though.”

Case
numbers
remain
a
key
factor
for
the
industry
to
watch,
Lunde
added.

“Case
numbers
grew
significantly
in
July
and
saw
an
uptick
in
the
HECM-to-HECM
refi
case
numbers
specifically,”
he
said.
“If
rates
drop,
that
HECM-to-HECM
case
number
column
will
certainly
be
one
to
watch.”

HMBS
issuance
tailwinds

The
rise
in
HMBS
issuance
should
put
some
“wind
in
the
sails”
of
the
reverse
mortgage
industry,
according
to
the
commentary
accompanying
New
View
Advisors’
issuance
data.

While
the
firm
described
the
increased
issuance
as
something
of
a
rebound,
this
news
remains
somewhat
tempered
by
the
reality
that
issuance
at
large
remains
near
historic
lows
going
back
to
2010.
It
also
follows
historic
issuance
gains
in
2021
and
2022.

FOA
was
once
again
the
top
HMBS
issuer
of
the
month
with
$166
million,
a
$27
million
gain
from
July.
Longbridge
was
next
with
issuance
of
$120
million
(a
$14
million
increase),
followed
by

PHH
Mortgage
Corp./Liberty
Reverse
Mortgage
with
$80
million
and
Mutual
of
Omaha
with
$73
million.

“Issuer
42,”
the
designation
given
to
the
former

Reverse
Mortgage
Funding
HMBS
portfolio
that
is
now
under
the
control
of
Ginnie
Mae,
again
issued
no
pools.
That
remains
consistent
with
the
activity
of
the
portfolio
since

it
was
seized
in
late
2022.

When
asked
about
what
led
to
the
increase
in
issuance
this
month,
New
View
partner
Michael
McCully
said
that
the
increase
itself
was
immaterial.
But
if
rates
fall,
then
issuance
could
rise
further.

“August
is
just
4%
over
the
2024
$474
million
HMBS
issuance
monthly
average,”
he
said.
“If
the
10-year
Treasury
yield
continues
to
fall,
expect
originations
and
HMBS
issuance
to
increase.”

Indications
from
reverse
mortgage
lenders
are
that
they
are
prepared
to
respond
to
a
rate
reduction
if
one
occurs.


Federal
Reserve
Chair
Jerome
Powell

indicated
recently
that
a
cut
to
the
federal
funds
rate
at
this
month’s
meeting
of
the


Federal
Open
Market
Committee
(FOMC)
is
on
the
table,
which
could
have
the
effect
of
driving
mortgage
rates
lower.

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