Reverse Mortgage Daily says October 2019 as the strongest month for HECM endorsement since May 2018 due to a favorable interest rate environment, according to data compiled by New View Advisors.
“Other than in February 2019, when the market recovered from the year-end slowdown and reached over 4,000 endorsements, October’s endorsement count is the strongest since May 2018,” New View writes in its commentary. “Part of the increase in volume can be attributed to lower interest rates. Now that interest rate declines have stalled, it remains to be seen if higher endorsement volume will continue.”
New View’s “Who buys What From Whom” report in October 2019 was also released, showing 63% of total origination and securitization volume was sold from originators to issuers of HECM-backed securities over the past year.
“Only 37% was originated and securitized by the same company. Of those loans that exchanged hands, 70% were sold by the top 100 sellers, and 20% were sold by the top 2 sellers,” New View says. “The total trade volume from the Top 100 list took a dip in September, with $98 million HECMs originated, sold, and securitized, the lowest total in the last 12 months. August was the high water mark, with over $178 million HECMs originated, sold, and securitized.”
A report by the Brooking’s Institute last month said that utilizing reverse mortgages could help open pathways of wealth for elderly homeowners.
The 2016 Survey of Consumer Finance found that more than 6 million homeowners older than 62 have less than $10,000 in non-housing financial wealth, but more at least $20,000 in home equity. However, Brooking’s said this resource is largely untapped.
“Longstanding explanations include general aversion to holding mortgage debt in retirement and a desire to leave the home as an inheritance,” the report says.
Brookings said the federally-insured reverse mortgage is designed to help elderly homeowners, offering access to home equity with no required monthly payment and protection for homeowners.
“Unlike a traditional forward mortgage where the balance falls over time as a borrower makes monthly payments, the balance on a reverse mortgage grows over time as interest and fees are added to the amount borrowed,” the report states.