New HECM Applications on the Rise

by Shannon Hicks
| One Comment
| December 2, 2019

HECM applications surge in 4th quarter of FY 2019

FHA case numbers reflect a significant increase in application activity in the last quarter of fiscal year 2019. More interesting is the composition HECM loan types which reveal…

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1 Comment

James E. Veale, CPA, MBT
December 2, 2019 at 2:44 pm
When focusing on the growth in CNA refis alone, for the first ten months of calendar 2019 versus the same period in calendar 2018, we see that the total for that period in 2019 is 4,833 which is an increase of 2,371 over total CNA refis for the ten month period ended October 31, 2018.

Here is another way to look at this increase. In calendar 2018, total CNA refis were 2,824. In the three months ended October 31, 2019, total CNA refis are 2,750. That means that in three months of 2019, the industry has experienced almost the same number of CNA refis as it did in all of calendar year 2018.

The kind of increase the industry is seeing is enough to grab any HUD official who questions whether HECM refis should be terminated let alone those who want it terminated. HECM Standards were introduced at the start of fiscal 2011. On March 31, 2013 (just 30 months later), that type of HECM was terminated. Why? Because the volume was much higher than anyone anticipated, it had to be eliminated due to its threat in losses to the MMIF.

Could HECM refis be eliminated due to its current growth? Expect it. Many of us do not believe that 1,700 HECM refi endorsements for HECM when compared to total HECM endorsements of 31,260 for all of fiscal 2019 is not of much concern to anyone. Looking at a refi endorsement pace of about 7,000 refi endorsements when total HECM endorsements for fiscal 2020 may be less than 35,000 endorsements is another matter. That is stating that the total increase in HECM endorsements could be attributed to increases in HECM refis alone.

There is an adage that goes: “pigs get fed; hogs get slaughtered.”
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