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HECM Volume Up 37.5% in 2020

Fitch Ratings

Home Equity Conversion Mortgage (HECM) endorsements were up 15.1% year-over-year in December to 4,097 loans, according to new data from Reverse Market Insight. For calendar year 2020, HECM volume recorded an annualized increase of 37.5% to 44,661 loans.

Eight of the 10 regions tracked by RMI recorded strong growth during December, led by New England’s 59.5% upswing to 118 loans, the Rocky Mountain region’s 28.9% rise and the Northwest/Alaska region’s 18.7% increase. Only the Mid-Atlantic region registered a decline, albeit with only 11 fewer loans originated in December compared to November, while the Great Plains region was unchanged in its volume month-over-month.

American Advisors Group (AAG) led the industry in origination volume, with 14,434 loans originated in 2020. However, this represented a slight 1% year-over-year decline in origination volume Finance of America Reverse LLC (FAR) placed second with 4,109 loans, barely inching out third-place Reverse Mortgage Funding LLC (RMF) with 4,108 loans—both companies recorded 19% year-over-year volume gains.

Looking back on 2020, RMI noted the reverse mortgage industry ended the year less than 5% changed from the monthly volume generated in January. The coronavirus pandemic had its greatest impact on HECMs in April with only 1,601 loans endorsed, a staggering 59% decline, although May experienced a vibrant rebound with a 215% gain in originations from April.

Separately, data compiled by New View Advisors determined that HECM-backed securities (HMBS) issuances reached $1.2 billion for December and ended 2020 at $10.6 billion in total issuance. The record level for these issuances is the $10.8 billion mark set in 2018.

According to additional data released by the National Reverse Mortgage Lenders Association, AAG maintained its top ranking as HMBS issuer in 2020 with $2.823 billion of issuance and a 26.5% market share. This is the second consecutive year AAG was the nation’s leading HMBS issuer. FAR placed second place with $1.869 billion issued and 17.55% market share, with Longbridge coming in third with $1.865 billion issued and 17.52% market share. RMF was fourth with $1.822 billion issued and a 17.1% market share, while PHH Mortgage ranked fifth for the year with $1.352 billion and a 12.7% market share.

The top five issuers accounted for more than 91 of all HMBS issuance in 2020, with 13 HMBS issuers active during the past year.

About Author: Phil Hall

Phil Hall is a former United Nations-based reporter for Fairchild Broadcast News, the author of nine books, the host of the award-winning SoundCloud podcast "The Online Movie Show," co-host of the award-winning WAPJ-FM talk show "Nutmeg Chatter" and a writer with credits in The New York Times, New York Daily News, Hartford Courant, Wired, The Hill's Congress Blog and Profit Confidential. His real estate finance writing has been published in the ABA Banking Journal, Secondary Marketing Executive, Servicing Management, MortgageOrb, Progress in Lending, National Mortgage Professional, Mortgage Professional America, Canadian Mortgage Professional, Mortgage Professional News, Mortgage Broker News and HousingWire.
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