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While the major players composing the top 10 reverse mortgage lenders has remained pretty consistent for the majority of 2020, the rankings within those top 10 have shifted as lenders have found themselves acclimating to a heightened business climate stemming from a low interest rate environment, and the additional pressure on seniors’ finances caused by the COVID-19 coronavirus pandemic.
|Rank||Company in 2020||Company in 2019||2020 Rank Change|
|2||RMF||One Reverse||RMF +2|
|4||Liberty Reverse||RMF||Liberty +2|
|5||Mutual of Omaha||Synergy One||Hold|
|6||Fairway||Liberty Home Equity||Fairway +1|
|7||Longbridge Financial||Fairway||Longbridge +1|
|8||Open Mortgage||Longbridge Financial||Open +2|
|9||One Reverse||HighTechLending||One Reverse -7|
|10||HighTechLending||Open Mortgage||HighTech -1|
In terms of the top 10 in 2020 versus 2019, four of the 10 positions have seen their respective companies manage to hold onto their rankings: American Advisors Group (AAG) has maintained its position as the number 1 lender in the country, while Finance of America Reverse (FAR), Mutual of Omaha/Synergy One and Longbridge have kept their positions in the ranking of Home Equity Conversion Mortgage (HECM) volume.
Last year’s number 2 lender, One Reverse Mortgage, performed at a high enough level early in the year to maintain a position on the top 10, but halted its reverse mortgage origination activity in February and has nearly dropped off as a result.
The figures are gathered from U.S. Department of Housing and Urban Development (HUD) data and additional information from Reverse Market Insight (RMI).
Volume gains, losses
Comparing total Home Equity Conversion Mortgage (HECM) endorsements from fiscal year (FY) 2019 to FY 2020, the industry grew by approximately 10,600 loans, making for a 33.8% rise in overall endorsement volume, a marked improvement over endorsements observed between fiscal 2018 and 2019 according to HUD data. 2020’s FY figures are still nearly 7,000 loans lower than figures seen in FY 2018. One would actually have to go back to FY 2004 to find totals lower than 40,000 loans (not counting 2019, of course), but that still makes for a marked improvement over last year, in an environment still acclimating to the disruptive 10/2/2017 changes.
Unlike the situation one year ago where the majority of top 10 lenders were seeing volume figures either at par or below the industry-wide reduction in volume, every major lender in the top tier save for one managed to record volume increases when directly compared with their 2019 totals by this point, based on data compiled by RMI. One Reverse Mortgage is the sole outlier here due to its exit from the industry in February.
Among the major lenders that have posted the biggest gains in 2020, three of the top 10 have seen percentage gains in the triple digits for their HECM volume, according to RMI data. Open Mortgage has seen a volume increase of 184%, followed by Liberty at 137% and Longbridge at 132%. A slightly adjusted picture will likely emerge in January.
Taking stock of changes in 2020
Prior to the COVID-19 pandemic’s official declaration by the World Health Organization (WHO), the industry endured the exit of One Reverse Mortgage as its parent company, Quicken Loans, opted to reorganize its assets to emphasize its successful Rocket Mortgage brand instead of continuing to provide its HECM and proprietary reverse mortgage products. That was not a good way for the industry to start the year, but the larger impact of that company’s exit does not appear to be pronounced according to John Lunde, president of RMI.
“It’s always unfortunate to see a leading lender exit the industry, but I don’t think the exit has significantly impacted industry volume levels,” Lunde tells RMD. “One Reverse didn’t lean on their parent company brand or distribution, and while they had [high levels of] volume for many years, I doubt too many potential borrowers were specifically swayed by the One Reverse brand name more than another reverse-only competitor.”
This idea seems to be corroborated by the activity One Reverse displayed in selling itself as a major lender of consideration for borrowers, and their advertising appears to have been less active when compared to other major lenders, Lunde says.
“That leaves marketing spend as a potential gap, and I’d expect the rest of the industry likely filled in that opportunity relatively quickly to the extent it was generating incremental volume,” he says.
While the COVID-19 pandemic likely did make a difference in this year’s increased levels of volume, it’s also likely that this was not the only factor that saw the industry recover from, and gain on its recent losses, Lunde says.
“I think it’s a case of so much effort and investment that has been made in the past several years with the media, financial planners, realtors and elsewhere,” Lunde says. “[Those efforts] catalyzed the COVID-19 situation, and a more volatile stock market creat[ed] conditions for those efforts to bear fruit this year.”
Impact of proprietary products
At the start of the year, RMD conducted an “Outlook” survey gauging where the mindsets of reverse mortgage industry professionals were at the start of 2020. According to the results of that survey, most professional respondents estimated that their companies’ volume of non-FHA proprietary reverse mortgage products in 2019 made up roughly under 10% of total volume, for those lenders and brokers who offer proprietary products.
This estimate on the part of those who participated in the survey proved to be reasonably close to actual figures related to proprietary product originations. According to Home Mortgage Disclosure Act (HMDA) data released this summer by the Consumer Financial Protection Bureau (CFPB), proprietary reverse mortgage volume made up roughly 9.7% of total industry volume across both HECM and proprietary categories.
As of now, lenders are not releasing origination figures for their proprietary product offerings, and HMDA data did not break down the 9.7% figure any further than a raw, overarching number. Nevertheless, representatives from major lenders which offer proprietary products contended that the raw numbers as provided by the HMDA data are not wholly representative of both the business and the promise that proprietary products generate for the reverse mortgage industry.
While the pandemic has highlighted an upward trend in reverse mortgage business this year, the industry’s adjustment to the changes handed down in October of 2017 likely heralded a strengthening of the industry even as it endured lower volume levels, Lunde says.
“I think the industry has had a positive growth outlook (albeit from a low starting point) since the 2017 HECM changes were fully digested by mid-2018,” he tells RMD. “So, the momentum this year is a continuation and extension of a positive trend already in place that I’d expect to continue so long as home prices don’t crash and interest rates don’t skyrocket.”
The outlook for other reverse mortgage companies that did not manage to crack the top 10 is also encouraging, and companies making their way up from lower positions also show a sign of potential industry positivity into 2021 and perhaps even beyond, he says.
“We have been excited to see several clients ranked in the 11-49 range double or more this year,” Lunde adds. “C2 [Reverse]; Primary Residential Mortgage, Inc. (PRMI); and Northwest Reverse. It’s great to see up-and-coming originators like this and a very healthy sign for continued growth of the product and industry.”