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   James E. Veale, CPA, MBT

   February 1, 2012 at 1:00 pm

   This month we clearly see MetLife is the big winner. Their total is greater than the next three (and almost next four) combined. [Of course based on the rule of thumb that the time from case number assignment to endorsement is four months, the impact of the MetLife financial assessment underwriting will not be seen until we obtain the endorsement numbers for March through May.]

   What we also see is that there are four distinct groupings in the Top Ten. The first is MetLife, the second for now is composed of One Reverse, Genworth, and Urban. The next stratum is Generation, AAG, and Security One. The final is composed of Layton First, Cherry Creek, and Reverse USA.

   Will the groupings become somewhat permanent over the next 12 months or so? It will be hard to unseat MetLife but the others could easily change in that time. [Even if its policy change knocked out 40% of the applications which would normally become endorsements in March through May, it would probably not impact the number one standing of MetLife although it might level the playing field some.]

   While the total endorsements for this month are up 11.6%, that is very misleading. The total is also 19.8% lower than the total for January 2011. For the first third of this fiscal year, total HECMs are less than 19,120 which reflects a pace of only 57,360 endorsements for this fiscal year. 57,360 endorsements are not 50% of the HECMs endorsed just three fiscal years ago. Last year at this time the total for the same four month period was just over 24,840 which was a little more than one-third of all HECMs endorsed during that fiscal year.

   The inventory of HECMs available for endorsement as of the end of the calendar year complicated by the drop in the conversion rate for applications with Case Numbers assigned is not encouraging. While 58,500 endorsements for this fiscal year is not unrealistic, even that number may now be too high. Remember the financial assessment mess at MetLife will not be seen for awhile. The good news is that many of the MetLife disqualified HECMs were approved by other lenders so the overall impact to industry wide endorsements should be negligible.

   If home values are doing better, that fact is not being reflected in the total Case Numbers being assigned. The trailing 12 month totals are getting worse with no let up yet in site. However, we will not know about case numbers assigned last month until near the end of February. Perhaps that number may prove better and produce better endorsement totals for June.

   As we head into an ever more difficult originating environment, having sales support from a group like Reverse Fortunes will become ever more valuable.

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