In a very strong year for reverse mortgage production – albeit with some well-documented caveats – home equity conversion mortgage (HECM) volume hit a 2021 record high in December, reaching more than 5,200 loans. The start of 2022, however, took things even further.

Home Equity Conversion Mortgage (HECM) endorsements increased in January 2022 by 10.6% to 5,771 loans, eclipsing the 2021 peak and putting the reverse mortgage industry on solid footing at the start of the year. a new Year. This is according to data compiled by Reverse Market Insight (RMI). A slight reduction seen in November did little to dampen the approval momentum seen since the start of the fall, culminating with the best month of the year in December in terms of raw volume before the higher totals seen at the start of 2022.

Once again, production of new home equity conversion mortgage-backed securities (HECMs) (HMBS) hit a record high, reaching nearly $1.4 billion in HMBS issuance in January in the eleventh month of the period after the London Interbank Offered Rate (LIBOR). ) “time.” As previously reported, the $13.2 billion total of HMBS issued in 2021 easily surpassed the previous industry record of $10.8 billion set in 2010, according to public data from Ginnie Mae and private sources. compiled by New View Advisors.

Reverse mortgage endorsements: more luck?

In the commentary published by RMI accompanying its January data, it was speculated that this new high volume starting the year with a fairly strong performance could help change the conversation regarding the overall perception of how long a volume industry high may persist.

“[January’s performance could be] shifting the conversation from a possible fluke in the year-end volume to wondering how far the industry can go further in the near term with very favorable real estate prices, low interest rates and new inflation concerns fueling the way,” the commentary read.

Of course, another potential factor in the increase in loan production for January may come from the fact that with a new year comes a new HECM loan limit. In late November 2021, the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) announced that the maximum HECM claim amount (MCA) for 2022 would be $970,800, a significant increase compared to the pace seen in previous years largely fueled by 2021’s blistering house price appreciation (HPA) rates.

Regional data also points to a notable jump in activity, with nine of the country’s 10 tracked areas – all but the Great Plains, which saw a sizable increase in December – saw gains in January from their totals for the month. previous. Leading the pack on the regional side is New England, posting a 47.8% jump to 126 loans. The Mid-Atlantic region also saw an increase of almost 40% to 265 loans.

Among the major lenders, the one that improved the most in January was Longbridge Financial with a volume increase of 47.8% for a total of 550 loans, giving it a market share of just 9.5%. behind the 28.4% share of industry leader American Advisors Group (AAG). . Reverse mortgage financing (RMF) also saw a notable jump of 24% to 480 loans, with 8.3% market share so far in 2022.

HMBS show

January’s HMBS show set a record for new original loan pools for the fourth consecutive month, according to New View.

“January production of new pools of initial loans hit a record $1.18 billion, topping December’s $1.14 billion, November’s $1.08 billion, and December’s $1.07 billion. ‘October. Approximately $552 million of new initial loan pools were issued in January 2021,” New View’s accompanying commentary reads.

Of particular note in the January data is the entry of a new HMBS issuer: Mortgage Assets Management, LLC, which replaces Reverse Mortgage Solutions (RMS) after acquiring the company and its portfolio from its former parent Ditech Holding Corporation after an extended, court-supervised process in 2019. MAM has since sold the RMS company to Ocwen Financial Services, parent company of Liberty Reverse Mortgage, as part of Liberty’s efforts to become an end-to-end reverse mortgage lender. end.

MAM released three HMBS tail pools in January, according to New View.

Overall, 2022 performance looks to be off to a good start for the reverse mortgage space. In January, New View Advisors partner Michael McCully indicated that 2022 could be another banner year for the space. Current trends and fundamentals give reason to expect strong performance from HMBS at the start of the year, he said.

“With the new, higher maximum claim limits in effect on January 1, stable to rising home values ​​and relatively low rates, we expect HMBS issuance to continue to be strong heading into 2022,” McCully said in January. “If rates stay low and house prices are stable, expect another strong year for HMBS issuance.”

Read the HECM Lenders report on RMI and the HMBS Issuance report on New View Advisors.