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Reverse Mortgages Slide from January High

The reverse mortgage market is still reeling from changes announced by the U.S. Department of Housing and Urban Development (HUD) in August 2017 that are set to lower principal limit factors starting October 2, 2018. Home equity conversion loan (HECM) originations plummeted 17.6 percent in February but remained relatively high, according to the latest data from Reverse Market Insight, Inc. [1]

Despite the notable drop in originations over the month, the number of loans originated in February is higher than all other months in the past year with the exceptions of January and March, the report [2] indicated.

HECM loan originations totaled 5,195 in February, down from an anomalous high of 6,308 in January.

In fact, January posted a 32.9 percent increase from the month earlier. Wholesale loans declined at a slightly faster pace than retail loans in February, according to Reverse Market Insight’s data.

Wholesale loans totaled 2,546, an 18.4 percent decline over the month. Retail loans totaled 2,649 in February, down 16.9 percent from January.

According to the report, of the 10 lenders who originated the most HECM loans in February, only two posted increases in originations over February: American Advisors Group with a 2 percent increase, and High Tech Lending with a notable 70.4 percent growth.

On the other hand, seven of the 10 lenders posted an increase in loan originations year to date compared to a year ago. Fairway Independent took the spotlight in year-to-date volume growth with an impressive 208.4 percent increase. However, Fairway followed the trend of declining volume over the month of February with a 36.9 percent decline.

American Advisors Group originated the most retail loans in February with 10,980 originations for the month, claiming 18.5 percent market share in this loan category. Finance of America Reverse originated the most wholesale loans in February, 8,310, comprising 29.5 percent of the market share, the report indicated.

The top 10 HECM originators claimed 85.8 percent market share in February.