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   James E. Veale, MBT

   June 1, 2022 at 1:28 pm

   We have not seen a fiscal year year-to-date (eight months) total of 44,674 total HECM endorsements like this since fiscal 2011 when that same total was 50,336. Fiscal 2011 was the last fiscal year in which total HECM endorsements for a fiscal year exceeded 70,000. May 2022 is the fifth best month for the modified and annualized conversion rate (from case number assignment through to endorsement) in the last 155 months (i.e., since June 2009).

   Will we reach 70,000 total HECM endorsements for this fiscal year? There are too many negative variables at work here to know just yet. One of the most disruptive sources currently is the volatility of the 10 Year CMT index for HECMs which as of May 31, 2022, have case number assignments but have not yet closed. Even if total endorsements only reach 65,000 for this fiscal year, that will be the highest such total since fiscal 2011.

   As to predictions for fiscal 2023, it is far too early to say with any accuracy but due to several factors, it does not seem HECM endorsement totals will exceed 65,000 next fiscal year and there are indications that the total HECM endorsements for fiscal 2023 could be in the low 50,000s (or less). It seems HECM Refi endorsements will be more than cut in half next fiscal year.

   This fiscal year has been a year of exaggeration, smoke and mirrors, and sales puff. If one believed the talk proprietary reverse mortgage closings this calendar year already exceed total proprietary reverse mortgages for all of 2007 when the industry had proprietary reverse mortgage closings from both Fannie Mae’s Homekeepers and “jumbos.” Further, total HECM endorsements related to first time HECM borrowers (H4Ps and Traditional HECMs) fell from about 33,100 for fiscal year 2020 to about 28,400 for fiscal year 2021. Worse the total for such endorsements in fiscal 2018 was about 42,500. So how are endorsements from referrals by Realtors and financial advisors propping up first time borrower HECM endorsements? Based on endorsement data from HUD, it is as if there are no endorsements from referrals from these two sources. Endorsements from first time borrower HECM originations seem unlikely to reach 33,100 this fiscal year. So will someone please cite data other than from subjective and biased sources that can be independently verified as to how the industry is growing from referrals by Realtors and financial advisors? Most of the evidence to date on industry wide growth from these two referral sources is rooted in anecdotal “evidence” from those who stand to benefit from such claims.

   Fiscal 2022 should give us an idea on how the industry is really doing with a harsh dose of reality during fiscal 2023.

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