It struck me the other day that we don’t talk nearly enough about applications here, especially since most of the endorsement information we do talk about is generally 1-3 months delayed from funding. We’ll certainly correct that and look for ways to put more application information in our reports, but the truth is that there is precious little information available out there today.
What we do have though, suggests that this is an interesting time to introduce applications, as recent trends are showing a record application month in March as well as a record endorsement month. You may have also seen a small item recently in the March issue of Reverse Mortgage Magazine by NRMLA that showed application and funding volume from 26 surveyed lenders showing roughly 30% drops in both areas.
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Granted, the survey information was just for January and February, but even on that basis the overall HECM application volume was up 13% in January and 7% in February. So that leaves a couple of big questions:
- If we assume the 26 surveyed lenders were representative of the overall industry, was proprietary volume really big enough to offset the difference reported between overall HECM applications and survey results?
- Or, were the 26 surveyed lenders (we’re assuming larger lenders) simply not representative of the industry? If we assume the surveyed lenders were larger institutions, this would be exactly the opposite of what we would expect given the recent trend back toward larger lenders gaining more share in the marketplace.
- We’re not privy to the survey results or methods by NRMLA, but is it possible the surveyed lenders were shading reality a bit for some competitive advantage?
As unsatisfying as it is (and it is) to not have a good answer to the questions posed above, let’s leave it on a brighter note. March application and endorsement data were both very positive. Each set a new record and together suggest that Q2 could shape up as a very nice quarter indeed for the industry.
The only caveat is that you’ll notice the last time we saw a spike to a record in HECM applications (October 2008), we didn’t see the resulting increase in endorsements until March 2009, as endorsements generally trail applications by 2-4 months. If there were any backlogs in operations around the industry these last few months, it’s likely that the March endorsements showed the bulk of the October application strength. And that might mean we won’t see endorsement volumes spike again until Q3…
We’ll just have to see how things turn out, but count us optimistic that March’s records and resulting Q2 performance bode good things for all of us.