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   James E. Veale, MBT

   April 3, 2024 at 3:04 am

   While month to month comparisons are quite useful, comparing fiscal year to date data can be even more so.
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   March 31, 2024 marks the end of the first six months of this fiscal year that ends on September 30, 2024. A few months ago, I estimated that the total endorsements for the first six months would be 13,500. Well once again I was wrong. The actual count was 13,225. Over optimistic assumptions resulted in an overestimate of 275 HECM endorsements.

   Total HECM endorsements for the quarter ended March 31, 2024 were 6,111 the worst such total for any quarter since September 30, 2003, 82 calendar quarters ago.

   As of today my estimate for HECMs endorsed during the nine months ending June 30, 2024 is 19,125 HECM endorsements and thus for the quarter then ending 5,900 HECM endorsements. Since June 30, 2003, there has never been a nine month start to a fiscal year with such a low total of HECM endorsements. The predicted 5,900 HECM endorsements, if reasonably accurate, will be the absolute worst calendar quarter for any of the 83 calendar quarters seen since September 30, 2003.

   As one indicator of the decline in annual HECM endorsements, slogans like “these loans sell themselves” and “there is room in this industry for everyone” are heard almost as frequently as the benefits of collaboration that came through the Extreme Summit of yesteryear. The latest major achievement of those who want to bring even more consumer protections to the products was October 2, 2017, when the Trump administration decided that borrowers needed more equity at the termination of the loan so PLFs were substantially cut and the PLF expected rate floor was reduced to just 3%. As a result of these changes, fewer and fewer seniors are being helped just as a lack of preparation in finances for retirement has been ever more realized. Yes, during a period of an unrealistic 10 year CMT index range we saw growth in HECM Refis for two plus years as never seen before or since. Growth through HECM Refis was like a flash in the pan that will return but most likely to the same degree we saw it during fiscal years 2020, 2021, and 2022.

   Is there any hope of seeing the glory days of 2003 through 2009? Perhaps but action by the Fed alone will not do it. We need the help of our primary regulator, HUD, in raising up both PLFs and the PLF expected rate floor. Can the MMIF withstand such changes? Industry leaders need to take the lead to demonstrate the validity and verifiability of MMIF survivability.

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