HECM endorsements hit 11-year high

Endorsements of Home Equity Conversion Mortgages in March jumped to their highest level since March 2011, as seniors took advantage of increasing equity.

Endorsement volume jumped 26.3% month over month to 6,510 endorsements from 5,153 in February, according to the report from Reverse Market Insight. Numbers increased across each of the 10 geographic regions tracked, with the Pacific/Hawaii region seeing the highest overall number of new endorsements, followed by Southeast/Caribbean markets. Meanwhile, Eastern areas had the highest increases by percentage.

Issued by the Department of Housing and Urban Development, home equity conversion mortgages allow homeowners aged 62 and older to tap into the value of their properties.

On a year-over-year basis, endorsements were up by 54.3% from 4,220 in March 2021. Recent rule changes from the Federal Housing Administration increasing the HECM loan-limit size likely added incentive for consumers to cash in. The change coincided with a steep rise in tappable home equity in the U.S., which amounted to nearly $450 billion at the end of 2021, according to Black Knight .

But with Treasury rates climbing steeply over the past weeks, the HECM market will likely experience some volatility, according to RMI’s report, but “there’s no doubt the industry has really capitalized on favorable conditions to start the year,” the report said.

States in the Pacific/Hawaii region, which also includes Arizona and Nevada, led HECM endorsements with 2,390, followed by the Southeast/Caribbean with 1,075 and Rocky Mountain markets with 851.

But far from being concentrated in specific parts of the country, the climb in endorsements was observed nationwide, with noticeable surges in the Northeast. New York/New Jersey volumes increased by 50.4% to 206 from 137 the prior month, and New England’s numbers rose 40.8% to 145 from 103 in February. Not far behind, the Mid-Atlantic area saw HECM endorsements climb 40,2% to 272 from 194.

“Our industry typically experiences spikes of interest from homeowners for reverse-mortgage products whenever there is significant economic uncertainty and stock market volatility,” Joe DeMarkey, strategic business development Leader at Reverse Mortgage Funding, said in a recent statement sent to National Mortgage News.

“Recent economic turmoil from Russia’s war in Ukraine and U.S. inflation greatly concerns senior homeowners, especially retirees who live paycheck to paycheck, who aren’t sure how it may affect their livelihoods," he added.

Mortgage interest rates also dropped in early March after steady increases in the first two months of the year, offering a brief window to some who may have felt they had missed out. But after monetary policy changes announced during meetings of the Federal Reserve mid month, rates surged by over half a percentage point in the final two weeks of March.

The top five leading reverse-mortgage lenders by volume all saw over 500 endorsements last month. The leading industry player, American Advisors Group posted 1,944 endorsements. In second position for March was Finance of America Reverse with 562 loans, followed by Mutual of Omaha Mortgage at 540. Rounding out the top five were Reverse Mortgage Funding at 530 loans and Liberty Reverse Mortgage with 503.