Home Equity Conversion Mortgage (HECM) endorsements saw a healthy increase in October 2024. They jumped by 11.3% to 2,392 loans for the month, according to data compiled by Reverse Market Insight (RMI).
But after additional data about the month of October was released, one metric of reverse mortgage industry performance — HECM case number assignments from the Federal Housing Administration (FHA) — saw a surprising increase at that time.
Case number assignments mark a crucial first step in the process of originating a reverse mortgage. They are issued by HUD once a HECM loan application has been submitted to the agency. Case number assignments and loan volume yields can ultimately diverge, but the former can often be predictive for the latter.
In October, HECM case number assignments jumped by 17% to 4,331 — the highest number in more than two years, according to a December analysis from RMI. The majority of these assignments were for so-called “equity takeout” cases, which are new reverse mortgages that are neither purchases nor refinances. These case numbers increased 18.1% to 3,399.
HECM-to-HECM refinance cases grew at a faster pace than equity takeout cases, rising 18.6% to 765. But equity takeouts had a much larger share of the total figure, which RMI and other analysts have consistently said is key to the future health of the industry. This is particularly true after the dissipation of the post-pandemic refinance boom.
HECM for Purchase (H4P) case numbers dropped by 7.2% to 167 cases, or 3.8% of the total case numbers for October. Despite sustained reverse mortgage industry efforts, H4P loans have not managed to break through to a meaningful degree with reverse mortgage customers.
In an independent actuarial review of the Mutual Mortgage Insurance (MMI) Fund submitted alongside the FHA Annual Report to Congress late last year, reviewers assessed that H4P volume is not significant enough to warrant its own breakout among broader HECM program data.
“This program allows seniors to purchase a new principal residence and obtain a reverse mortgage with a single transaction,” the report said. “However, these HECM for Purchase loans have been a small percentage of HECM endorsements each year. […] In our analysis, the traditional and for-purchase HECMs are treated the same, as the volume of for-purchase HECMs is small.”
The updated numbers for October also illustrate the divide between retail and wholesale HECM originations. The growth of the wholesale channel (18.6%) nearly tripled that of the retail segment (6.7%) in October. But RMI found that only half of the industry’s top 10 lenders recorded volume gains compared to September.
Longbridge Financial and Goodlife Home Loans recorded the strongest gains in October with respective growth of 51.6% and 50.5%. The vast majority of Goodlife’s business is conducted in the wholesale channel, according to RMI. Fairway Independent Mortgage Corp. had a 31% jump in loans in October.
