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…)

Our prior use of a “heat map” showing Home Equity Conversion Mortgage Growth in U.S. States was well received by visitors so we thought we’d make it a monthly feature using data from HUD’s monthly HECM activity reports.

The map below is based on percentage changes HECM growth rates for the 12-month period ended 10/31/07 compared with the 12-month period ended 10/31/06. RED, ORANGE, and YELLOW states all had HECM growth rates exceeding the national average while BLUE and GREEN had growth below the national average. More detailed color code descriptions are included below the map:

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Recently, we’ve spent time catching up on some reading. There have been a number of good articles on reverse mortgages published recently by respected sources like Kiplinger and others. A new book on reverse mortgages (The Complete Guide to Reverse Mortgages), has also hit bookstores within the last couple of months and we’re now in the process of reading it. The recent boom in reverse mortgage growth has definitely spawned a spin-off boom of new literature targeted at seniors wanting to learn more about this “new” retirement financing tool.

Most of the reading materials we’re seeing are accurate, even-handed and clearly written.

But we can’t help noticing that they all are missing some extremely important information about reverse mortgages. In fact, in the materials we’ve seen, we don’t recall seeing even a passing mention of this information - information that we believe is absolutely crucial for anyone considering a reverse mortgage to be aware of. (more…)

Homeowners across the U.S. are facing tight financial situations brought on by the expiration of teaser rates on adjustable rate mortgages (ARM) that seemed like such a wonderful deal just a few years ago. According to Forbes, nearly 2 million homeowners are expected to see their adjustable-rate mortgages reset at higher rates by the end of 2008.

And the problem isn’t just isolated to younger homeowners who bit off more than they could afford. Plenty of senior homeowners are finding themselves in this situation as well. But seniors are luckier because they have available a credit repair tool that’s not an option for homeowners under age 62: reverse mortgages. More About Using a Reverse Mortgage to Get Out of Tight Spots…