Home Equity Conversion Mortgage (HECM) endorsements declined by 4.2% in March, a dynamic primarily driven by an drop in endorsements from the wholesale side of the business even as the retail side saw a month-over-month improvement in originations. This is according to data compiled by Reverse Market Insight (RMI).

Retail endorsements gained 9% over their February totals, rising to 1,233 loans, while wholesale endorsements dropped by 2.3% to 824 loans, a noticeable if modest divide between the two business channels.

When asked about the dynamics driving the business this way, it was mostly driven by the dominance of the largest lenders in the space, according to Jon McCue, director of client relations at RMI.

Jon McCue

“In this case, the largest retail players showed fairly large gains with 11 of the top 15 growing nine percent or more,” McCue told RMD. “Considering this bucket makes up the vast majority of loans typically, it is no surprise to see retail pop and wholesale have a modest decline. However, wholesale only dropped 2.3%, which isn’t a massively significant drop from a month to month look.”

When asked about the biggest indicators for which channel will see certain swings, McCue was quick to point the finger at case numbers issued.

“Case numbers have been steadily rising for the past three months, so it should be no surprise that this build-up of case numbers and applications would soon be closing,” he said.

When asked about a business line that wholesalers might be able to take advantage of in the months ahead, McCue said that HECM for Purchase (H4P) loans could be an attractive option.

“I believe from a wholesale perspective, this should be a wonderful talking point to the traditional forward LOs who are looking for more business,” he explained. “We have actually seen H4P case numbers steadily climb for the last 3 months as well with March’s being the highest we have seen since August of 2023. This segment is certainly trending in the right direction, and in conversation with LOs the new changes to the program are being well-received by builders and some real estate agents.”

All that being said, the first four months of the year may not have led to a large turnaround in business from 2023. But there are potential signs of improvement in the months ahead, McCue said.

“Endorsements have been less than the industry would hope for, but we have noticed two months of increases, and this can be attributed to the three consecutive months of increasing case number assignments,” he explained. “We also have three consecutive months of H4P case number assignments growing. With this said, this year isn’t what we would like from a volume standpoint, but the data leads us to believe we are better off than we may imagine.”

Compared to the past few years of business, McCue said that the industry is getting stronger particularly since HECM-to-HECM refinances have diminished in the face of growing H4P business.

“Adding more of the large traditional institutions to the fold can help us maintain this path hopefully, but even for them there is an uphill battle as they try to get the buy-in from their teams,” he said.

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