Increased HECMs in Rockies spurred 2021 volume growth

Vitalii Vodolazskyi - stock.adob

Home equity conversion mortgage endorsements finished the year strongly with December numbers hitting their highest monthly volume since early 2018 and overall numbers for the year jumping up from 2020, according to data from Reverse Market Insight.

In December, new endorsements increased 5.4% to 5,218 compared to 4,953 one month earlier. Last month’s incoming volume was the largest since January 2018 when an imminent rule change led to a spike in new endorsements, according to RMI’s report. On a year-over-year basis, HECM endorsements jumped up by 18.7% from 2020.

The Great Plains saw the greatest monthly percentage uptick, rising 85% from 46 loans to 85, while the Midwest region increased its number of endorsements from 222 to 257 between November and December, a 15.7% increase. Rocky Mountain market volume climbed 12.7% from 694 to 782 month-over-month, capping a strong year for reverse mortgage activity in that part of the country, according to RMI.

“This region is one of the best stories of 2021, rising from a dead heat with Northwest/Alaska for fourth place to challenging Southeast/Caribbean for second,” the report said.

The rise of Denver and Salt Lake City has driven the growth of HECMs in the Rocky Mountain region over the past 12 months, with the Mile High City second in the country last year behind Los Angeles among metropolitan areas with 3,777 endorsements, compared to 3,846 for California’s largest market. Also, Salt Lake City was second among cities with the largest HECM percentage growth, jumping 57.2% to 2,445 from 1,555 in 2020, behind Memphis’s spike of 58.9% with a smaller volume of 89 for 2021, up from 56 a year earlier.

Some mortgage companies in 2021 increased their focus on reverse mortgages, as profits through other channels softened. While Federal Housing Administration-backed HECM loans exclusively serve homeowners ages 62 and higher, the reverse-mortgage market also saw the emergence of proprietary and reverse-hybrid products targeting those as young as 55. Several lenders, including Cherry Creek Mortgage and Mid America Mortgage, made strategic hiring moves as well to increase reverse-mortgage originations.

In overall numbers, the Pacific/Hawaii region, which also includes Arizona and Nevada, continued to surpass the rest of the country in yearly HECM volume, with 19,262 endorsements in 2021, up 28.7% from 14,967 in 2020. The Southeast/Caribbean saw growth of 11.3% year over year, rising to 8,325 from 7,478, while the Rocky Mountain area increased to 6,586 from 5,158, a 27.7% rise. Northwest/Alaska markets experienced a yearly uptick to 5,847 from 4,368, putting it in fourth place, but its annual growth of 33.9% led the nation.

The Southwest region, which stretches from New Mexico to Louisiana, increased endorsements by 6% to 3,988 from 3,763 year over year, while Midwest numbers climbed 2.7% to 2,729 from 2,668. Endorsements rose in the Mid-Atlantic to 2,548 from 2,348 in 2020, an 8.5% uptick.

New York/New Jersey and New England were the only two areas of the country with declines in annual endorsements, ranking them eighth and ninth overall. New York/New Jersey came in with 1,896, down 4.7% from 2020’s volume of 1,990, and New England saw its volume fall 9.7% to 1,134 from 1,256 year over year. Rounding out the list was the Great Plains, with new endorsements climbing 6% annually to 705 from 665.

American Advisors Group led all lenders in the number of HECM endorsements last year with 17,096, up 18% from 14,434 in 2020. In second place was Reverse Mortgage Funding with 5,355 increasing 30% from the previous year’s 4,108, Finance of America Reverse rounded out the top three lenders with 4,636 endorsements, up from 4,109 a year earlier.