MBA says HECM Numbers Down!

The Mortgage Bankers Association has come out with its first half origination figures for 2007. Here’s what they say regarding HECMs:

“From the Second Half of 2006 to the First Half of 2007, reverse mortgage dollar volume decreased 92.4 percent. FHA’s Home Equity Conversion Mortgages (HECMs) decreased by 92.4 percent and other reverse mortgages increased 13 percent, while the number of reverse mortgage loans decreased 93.1 percent. This result was driven by a 92.4 percent decrease in smaller balance HECM loans which comprised 86.9 percent of the dollar volume of reverse mortgages and therefore the 13 percent increase in (typically) large dollar balance reverse mortgages did not have a discernible effect on the overall trend of reverse mortgage dollar volume.”

The idea that the number and dollar value of HECMs could drop more than 90 percent and yet not impact mortgage dollar volume seems, um, contrary.

This is what we reported from HUD earlier this week:

Meg Burns, Director of the FHA’s Single Family Program Development program, had some interesting facts and statistics regarding reverse mortgages, data which gives us some perspective. Here are the significant items from her statement before the Senate’s Special Committee on Aging.

*HECMs continue to be at the forefront of the reverse mortgage industry, representing approximately 90 percent of the business today.

*Over the last four years, HECM volume has increased steadily, from 37,000 loans in 2004 to 107,000 in 2007.

*In spite of the program’s success, we at FHA recognize there are areas for improvement.

“We have worked with the industry – including the National Reverse Mortgage Lenders Association (NRMLA) and the American Association of Retired Persons (AARP) Foundation – to address some areas of concern,” said Burns. “For example, we are working together to reduce the transaction costs and to improve the availability of quality counseling across the nation. Over the last year, we have been assessing the upfront fees, such as the origination charge and the mortgage insurance premium, to determine whether any costs can be eliminated or reconfigured to make the product more affordable and appealing to consumers while maintaining actuarial soundness of the premium.”

Could it be that the lenders surveyed by MBA are simply not the source of most HECMs?

This entry was posted on Friday, December 21st, 2007 at 6:42 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.