Reverse mortgage performance metrics end 2024 on a mixed note

Much like the rest of 2024, key performance metrics for the reverse mortgage industry went on something of a roller coaster ride for the final month of the year. This is set against a backdrop of changes, with a new Home Equity Conversion Mortgage (HECM) limit that became effective Jan. 1 and a new complementary issuance program with a cloudy implementation timeline.

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HECM endorsements increased by 9.1% from November to December 2024, with 2,626 loans endorsed last month, according to data compiled by Reverse Market Insight (RMI).

Meanwhile, HECM-backed Securities (HMBS) issuance decreased by $8 million during the month for a total of $575 million in November. There were 75 pools issued, four more than in November, according to Ginnie Mae data and private sources compiled by New View Advisors.

HECM volume has year-end spike

Six of the 10 geographic regions tracked by RMI saw increases in December, with the Southeast/Caribbean region showing a 42% jump to 724 loans. Not only was this the top spot for the month of December, but it also pushed the region to the No. 1 position for the year, RMI noted.

Similarly, six of the top 10 lenders also posted gains in December. The biggest top-line takeaway based on retail endorsements is that Mutual of Omaha Mortgage further cemented its position as the industry’s No. 1 retail reverse mortgage lender. In December alone, the company saw a 40.9% spike over the prior month to 641 loans. This bested Finance of America (FOA) by nearly 100 loans in December.

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But FOA has also been more heavily emphasizing its proprietary product suite that includes HomeSafe Second, its closed-end, second-lien, private-label reverse mortgage. Lenders do not report their proprietary origination data alongside their HECM endorsements.

But FOA and other industry leaders also posted gains over the prior month, including Longbridge Financial, Fairway Independent Mortgage Corp., Plaza Home Mortgage and HighTechLending.

Some of this data stems from a more favorable mortgage rate environment that started to emerge in the closing months of the year — but the moment didn’t last. Rates remain elevated beyond what either the forward or reverse mortgage industries want to see, which is consistent with the element that industry professionals pegged as the biggest business challenge of 2024.

But there were also some positive signs. A recent look at data from October that includes both wholesale and retail endorsements saw HECM case numbers reach their highest level in two years, and the rise in December endorsements might be tied to these higher case numbers.

But challenges, including rates, remain. There are also many of the longtime issues the reverse mortgage industry has had with product education, distribution and consumer sentiment.

HMBS issuance leaves industry a ‘lump of coal’

FOA once again led the pack of HMBS issuers in December, adding $28 million over November’s totals to hit $184 million. Meanwhile, Longbridge lost $10 million in issuance to finish December at $139 million, followed by Mutual of Omaha ($106 million) and PHH Mortgage Corp. ($96 million).

In its analysis of the issuance data, New View pointed out that the 2024 total “was the lowest HMBS issuance year since the program’s infancy in 2008,” and that after subtracting tail issuance, “2024 HMBS new origination volume totaled just $3.95 billion.”

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But New View partner Michael McCully said that doesn’t mean that the issuance market is in poor condition.

“Liquidity and execution remain fairly healthy and there is optimism HMBS 2.0 will provide additional capital relief to the industry,” he told HousingWire’s Reverse Mortgage Daily (RMD).

HMBS 2.0 development began at Ginnie Mae roughly one year ago. It is designed to bolster liquidity in the secondary reverse mortgage market, including through a reduction in the HMBS pool size to 95% of the loan’s total unpaid principal balance (UPB).

This move is designed to “create an additional economic incentive to protect Ginnie Mae and taxpayers against a decline in collateral value,” the company explained when announcing the initially proposed term sheet last summer.

Ginnie Mae issued a final term sheet in November, but an implementation timeline is currently uncertain and further clouded by the impending transfer of power to the second Trump administration on Jan. 20. But when it comes to getting the ball rolling on the new program, McCully said sooner is better.

“Regardless of its impact on HMBS volume, the sooner the better for the health of the industry, especially those HMBS issuers with more seasoned books,” he explained.

The December issuance data also showed that HMBS issuers are continuing to take advantage of a policy that allows for pool sizes as small as $250,000. In December, 19 pools of less than $1 million were issued, adding $11.6 million of UPB to the equation that would not be there otherwise.

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