No Reason to Panic

Premier Reverse Closings

It’s not just the HECM market that led to Live Well’s exit

It’s been quite some time since a top-ten HECM lender has left the industry. The news of Live Well Financial’s sudden exit from reverse mortgage lending last Friday left many somewhat stunned. But in fact, the company is ceasing all origination activities for both forward and HECM loans. 

In the most recent Top 100 HECM Lenders Report for April, Live Well posted 74 loans, 350 for the year to date (Jan-April). If you compare their 2018 production in the same period you may see one of the reasons for their exit. In April 2018 Live Well had 114 endorsements with 605 HECMs endorsed that calendar year to date.

While many may find the news unsettling, the exit of Live Well was thought by some to reflect a more organic response to an ever-changing market. Just one short year ago the lender announced their intent to emphasize forward or traditional lending, which the company had been originating since their founding in 2005.

The reasons behind the lender’s sudden shutdown were unclear until the Richmond Times-Dispatch published an excerpt yesterday from the company’s notice filed with Virginia employment officials.

“This reduction in credit availability combined with challenging conditions in the markets for mortgage loans, which were conditions outside of the company’s control, along with related regulatory issues, have resulted in the company having insufficient available cash to continue operations”, the notice stated. The cash-crunch was triggered by sudden and unforeseen market changes in specific financial assets the lender used as collateral in gaining credit.

Such credit arrangements are common in mortgage lending and servicing.

Live Well’s exit while disappointing should be kept in perspective noting the unique and specific challenges that triggered the closure of both traditional and reverse operations.

2 comments

Tom O’Donoghue May 7, 2019 at 7:24 am

Exactly correct. It wasn’t just the reverse division, but the company.

I am guessing that Live Well wasn’t meeting their investors expectations and had them on a short leash.

Reply
The_Critic May 7, 2019 at 1:42 pm

This is one time it would be great if CNN and MSNBC would play the Jim Morrison song for our industry —- “The End.” With both the black eye to the industry going on with the RMS bankruptcy and taking HECM applications at and through Live Well with no intent in funding them, the image of our industry is not just flawed, it is getting awful. Add to that the sheer joy expressed over an endorsement month of just 2,901 endorsements with an ominous request from the President to explain how MMIF losses will be taken care of.,

Yeah, the April 2019 endorsement total was an increase of 12.7% over that same total for March 2019, BUT it is 444 endorsements lower than the total for April 2018 for a 13.3% drop in endorsements when April 2018 was declared by the stat vendor for the industry to be the likely post 10/2/2017 nadir for month endorsements. Yet every the endorsements for every month since (except for February 2019 and May 2018) were lower than the supposed nadir.

If we annualize 2,901 per month that is a pace of 34,812. per year, a pace that is 30.4% of the total for fiscal 2009, the apex fiscal year for annual endorsements. This has been a fiscal year of slashed marketing budgets, large reductions in the reverse mortgage originators, It is time for lender leadership, NRMLA, and even HUD to get their act together.

At a time when HECM actuarial losses are choking the forward loan reserves in the MMIF, it is PAST time to get serious about this industry. We are now but the shadow of what we once were. Military leaders who complain about the number of their troops and their military readiness are little more impotent. Does that have ANY application to our industry today?

And here we are with the courts helping HECM borrowers find their way through the RMS mess

Reply

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