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HECM Volume Up 37.5% in 2020

Fitch Ratings

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 [1]. 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 [2] 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 [3], 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.