AARP recently released one of the most comprehensive reports to date on the state of the reverse mortgage industry. The report (Reverse Mortgages: Niche Product of Mainstream Solution?) includes a wealth of information about consumer attitudes and experiences with reverse mortgages.

One of the more interesting presentations in the report is the listing of the top reasons given by people for considering a reverse mortgage. (more…)

8,270 HECM reverse mortgages were endorsed during November 2007 according to the most recent HECM activity report released by HUD. November’s HECM production is a 10.6% gain over the 7,478 HECM’s endorsed in November 2006 but a 1.7% decrease from October 2007 when 8,417 HECMs were endorsed. More troubling: November was the third consecutive month that HECM production fell below its 12-month moving average - the first time this has occurred since mid-2005.

The 12-month moving average provides a clearer trend line of HECM loan growth by smoothing out month-to-month variations. Interestingly, despite the fact that monthly HECM activity has dipped below the 12-month average for three straight months, the 12-month average itself hit an all-time high of 9,004 in November, due mostly to the exceptionally strong HECM activity earlier in the 12-month period.

For the calendar year 2007, 100,286 HECMS were endorsed compared to 77,879 during the first eleven months of 2006 - a 29% rise. For the twelve months ended 11/30/07, 108,046 HECMS were endorsed - a 30% rise over the 82,838 endorsed during the prior twelve month period.

Clearly, falling home values and the problems in the traditional mortgage sector are taking their toll on the once torrid growth of reverse mortgages. We’ll have more to report on the most recent HECM statistics in future posts.

We came across this table that was part of a presentation at the Mortgage Banker’s Association 94th Annual Convention. The table shows, by borrower age, the cause for HECM reverse mortgage loan payoffs.

We’ve previously written about the surprising fact that the majority of HECM loans are paid off within seven years. This chart expands on this showing the general reasons why HECM loans are paid off.

Most notable is the fact that less than 1/3 of HECMs terminate due to death. Overall, the vast majority of HECMs terminate because the borrower sells and/or moves out - not because the borrower dies while living in their home. (more…)

Much has changed over the past year in the HECM loan market: Florida has taken over from California as the reverse mortgage activity “hot spot” in the U.S.; new products like the HECM 100 and HECM 125 have emerged, and the overall volume of HECM loans has increased substantially. We thought it would be interesting to track HECM market changes in each of the locations that HUD processes home equity conversion mortgages.

The following table shows, for each location, the absolute change in HECM volume and the change in market share. Time periods used for comparison are the 12-month periods ended 10/31/07 and 10/31/06. Most of the significant changes reflect the emergence of Florida HECM activity and the corresponding declines in California HECM activity that we’ve noted before. But some other interesting points emerge as well: (more…)

October HECM activity rebounded somewhat from the sharp falloff seen in September, but remained well below the 12-month average. According to HECM MIC reports recently issued by HUD, 8,417 HECMs were endorsed in October, a 9% increase from September’s total of 7,695. But the October total fell about 6 percent under the 12-month moving average of 8,938 monthly HECM endorsements and was, surprisingly, about four percent lower than the 8,789 HECM’s endorsed one year ago in October 2006. (more…)

We put together a “heat map” of the 50 states to highlight how widely HECM activity varies across the nation. States in blue and purple are “cooler” HECM markets while yellow, orange and red represent hot areas of the country.

The map is based on a comparison of each state’s 2007 HECM activity (through nine months) to 2006 HECM activity for the full year. While this is not an “apples-to-apples” time-frame comparison, we feel it provides a means to highlight areas where HECM growth is strongest. Markets that have equaled or exceeded the prior full year’s production in just nine months are obviously HOT. (Overall, U.S. HECM endorsements through September 2007 are just 2% lower than HECM production for all of 2006: 83,596 vs 85,639.) (more…)

For years, California has dominated the reverse mortgage scene accounting for nearly one-third of the total HECMs endorsed as recently as CY2006. Figures through September 2007, however, show that HECM endorsements in the Golden State have fallen sharply when viewed as a percentage of the total HECM activity.

Florida HECM production, meanwhile, continues to be strong and growing in 2007. Indeed, Florida appears poised to surpass California as the top state for HECM endorsements. (more…)