Changes occur at the top in HECM endorsement volume

The list of home equity conversion mortgage lenders saw a new leader at the top in a year that brought developing interest in the segment and the rise of proprietary products, but also volatility.

Mutual of Omaha Mortgage led all lenders in HECM endorsements, supplanting Finance of America Reverse, the company in the No. 1 position at the end of 2023. Mutual of Omaha reported 6,149 of the Federal Housing Administration-backed reverse mortgages in 2024, a number that was 1.5% lower than its 6,240 endorsed a year earlier. The numbers come from a report issued by Reverse Market Insight.

Meanwhile, Finance of America saw volume fall by more than a third, or 33.8%, to 5,946 last year compared to 8,981 in 2023, when it received approval for its acquisition of the previous long-time leader in the space, American Advisors Group. 

The change at the top occurred despite the merger between two lenders that, combined, far outpaced their competitors in endorsement volume earlier this decade. AAG by itself led all HECM providers in each of the preceding years, with Finance of America traditionally among the top five. 

The drop in Finance of America's volume came, though, as the company focused on consolidating assets belonging to AAG at the beginning of 2024, a task that included aligning origination systems and also embarking on a new marketing strategy.  

The decrease in HECMs also may also reflect the company's efforts to lean into and promote its own proprietary products, a strategy it said it wished to focus on in late 2023.   

By market share, Mutual of Omaha accounted for 22.9% of 2024's volume, with Finance of America just behind at 22.2%. Falling in line behind them were Longbridge Financial, Liberty Reverse and Fairway Independent Mortgage, with 12.3%, 4.2% and 4%, respectively.

The slowdown in HECM volumes year over year among the top lenders corresponded to overall trends in the segment, with 26,834 total endorsements industry-wide in 2024. The number was 12.2% below the 30,550 recorded a year earlier. 

The 12-month period provided mixed fortunes, according to Reverse Market Insight. More lenders poured resources into developing their reverse-mortgage divisions, but 2024 "ultimately ended in disappointing fashion" due to the upward trajectory of interest rates, RMI said.

The amount of tappable home equity available to homeowners 62 and older, the target market for HECMs, increased to $14 trillion in the second quarter last year, the National Reverse Mortgage Lenders Association estimated. 

Taking available equity into consideration along with mortgage rates that currently are more than double where they sat at the start of 2022, mortgage businesses see potential opportunities in the market for reverse loans and other liens allowing homeowners to tap into accrued amounts. 

Rising rates, though, still managed to effectively decrease the appetite for the federally sponsored home-equity product, RMI reported. "From here on, these volumes are swimming upstream for as long as rates keep ramping upward."

Rate headwinds, though, may lead borrowers to consider the proprietary second-lien offerings that emerged in the past two years as an alternative. 

The past year still finished with endorsement volumes on the rise but primarily due to activity flowing through from previous months before rates jumped, according to RMI. In December, endorsements totaled 2,626 across the industry, up 9.1% from November. 

Markets in the Southeast/Caribbean division closed 2024 with a rush of 724 new HECM endorsements, the highest monthly total for any region over the previous 12 months. The number represented a 42% leap from November.

The FHA-designated Pacific/Hawaii region saw 608 loans endorsed in December, down 3.2% month over month from 628. Six out of 10 of the government geographic divisions posted an increase in volume to end 2024.