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   James E. Veale, CPA, MBT

   September 2, 2020 at 4:09 am

   The HECM endorsement total for August 2020 was 4,007 the fourth lowest such total for any month since July 2005. This total is also the lowest such total for any August since August 2004. The increase in total HECM endorsements for August 2020 was 71.2% higher than the same total for August 2019.

   With only one month left in this fiscal year, total HECM endorsements already exceed the total for last year by 21.3%. As expected the current total for 11 months is 37,922. It now appears that fiscal 2020 will see about 41,400 total HECM endorsements.

   The total HECM endorsements for fisal 2020 should be over 10,100 than for fiscal 2019 for a percentage increase of 32.3%, which would be the highest such percentage increase in 13 years (i.e., since fiscal 2007). It is also the highest increase in endorsements since fiscal 2007. The HECM endorsement increase was the fourth largest in the history of the industry but the percentage increase was only the 11th highest of all time. (The total endorsement increase in fiscal 2007 was 31,207 for a 40.9% increase which was the ninth largest percentage increase of all time but the second largest increase in HECM endorsements of all time).

   One of the most interesting stats is that the modified and annualized conversion rate for August 2020 was 69.4% which was the 7th highest such rate in the last 109 months. No doubt, the rate reflects the high volume of HECM refis in this fiscal year.

   Last week HUD provided breakdowns for HECMs endorsed and HECM Case Number Assigned during July 2020. Total HECM endorsements for the ten month period ended July 31, 2020 rose by 7,373 over the same 10 month period for fiscal 2019. Of that increase H4P production rose by 115 HECMs, Traditionals rose by 2,343 and HECM refis rose by 4,915; thus HECM Refis are 66.7% of the total increase in that 10 month period of time making HECM refis the strong growth category of HECMs.

   At the same time, new endorsements are not sufficient to offset HECM terminations and assignments so that the pattern of loss in the active HECMs continues to drop.

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