Financial Assessment is still working. Now in its ninth year, FHA’s policy of requiring the financial assessment (FA) of borrowers’ ability to pay has helped cut tax and insurance default by over 80% and serious defaults by over 75%. These results validate the encouraging data we shared in previous years.

FHA’s objective for its Financial Assessment regulations was to reduce the persistent defaults, especially Tax and Insurance (T&I) defaults, plaguing the HECM program in 2009-2014. As FHA put it, “… an increasing number of tax and hazard insurance defaults by mortgagors led FHA to establish … a requirement for a Financial Assessment of a potential mortgagor’s financial capacity and willingness to comply with mortgage provisions.” Financial Assessment requirements became effective for HECMs with case numbers issued on or after March 2, 2015. Since then, HECM lenders make a financial assessment of borrowers’ ability to meet their obligations, including property taxes and home insurance. T&I and other defaults can lead to foreclosure and result in significant losses to FHA, HMBS issuers, and other HECM investors. Defaults rose steadily during the financial crisis and remained a thorn in the side of the program until Mortgagee Letters 2014-21 and 2014-22 were released.

It’s been eight years since Financial Assessment began, so we can measure with increasing confidence the effect of this policy by comparing default rates of loans originated before and after the FA rule was implemented.

With this in mind, we looked at a data set of more than 300,000 HECM loans, comparing loans originated in the post-FA period from July 2015 through March 2023 to loans originated in the pre-FA period before March 2015. After July 2015, there were few (if any) loans originated under the pre-FA guidelines. As the guidelines took effect in March 2015, the second quarter of 2015 included a mix of FA and pre-FA loans.

The data show a very strong reduction in T&I default in the post-FA period. As of March 31, 2015, the pre-FA data set had a T&I default rate of 7.1%, and an overall serious default rate of 10.5%. As of March 31, 2023, the post-FA data set shows a T&I default rate of approximately 0.9%, and an overall serious default rate of 2.3%. For the purpose of this analysis, we define serious defaults as T&I defaults plus Referrals to Foreclosures, actual foreclosures and other “Called Due” status loans. These results remain consistent when we compare comparable cohorts by loan age.

Over the past several years, FHA has taken a number of steps to reduce defaults in its HECM program. These include Mortgagee Letter 2013-27, which limits in certain cases the amount that can be lent in the first 12 months. Also, a series of Principal Limit Factor (PLF) reductions has reduced the amount lent even when the loan is fully drawn. Not surprisingly, the economic health of FHA’s HECM insurance fund has improved dramatically, from negative $8 billion in Fiscal Year 2016 to a positive $15 billion as the end of Fiscal Year 2022.

Given these results, we continue to give Financial Assessment high marks for reducing defaults. After nearly eight years of experience, it is clear the HECM program has graduated to a sounder credit footing.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.

April’s HECM endorsement count dropped to 1,963 loans. As expected, last month’s high count was due to nothing more than AAG clearing its backlog. This month the report shows no endorsements from AAG, without which the trend of declining HECM production continues. Our full report can be found here: NV Endorsement 2023_04.

HUD’s March Endorsement Snapshot Report was just released on its website. HECM to HECM refis dropped to less than 10% of all endorsements for the first time since September 2019. Also of note, Fairway Independent Mortgage Corporation production has dwindled to just eight loans this month. For years, Fairway was the lead wholesale originator (originating loans sponsored by another party).

HECM endorsement volume continues its freefall, dropping to 2,185 units in February from last month’s 2,489. Compared to a year ago, there has also been significant shifting of origination league tables: RMF’s origination is essentially zero after its bankruptcy filing; AAG’s share dropped from over 30% to under 25%; and Longbridge’s 12-month production is 9.2% of all endorsements, up 56% from a year ago’s 5.9% market share. Our report can be found here: NV Endorsement 2023_02.

HUD’s January Endorsement Snapshot Report was just released on its website. HECM refis are down to 10.7% of all endorsements. Given that refi volume is materially less impactful, and traditional HECM origination is flatlining, we may be approaching a floor in monthly HECM endorsements.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:
—Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
—WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
—Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer

Edited samples from recent WBWFW reports are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

Total HECM endorsements dropped to 2,489 in January, down another 11% from last month’s 2,786 tally. Geographically the decline was again greatest in the Santa Ana Homeownership Center at -19.1%; the Philadelphia Homeownership Center was the only Center up, a modest 1.8%.  Our report can be found here:  NV Endorsement 2023_01.

HUD’s December Endorsement Snapshot Report was just released on its website. HECM refinance is down to just 14.5% of all endorsements, falling faster than the overall HECM endorsement count.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:
—Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
—WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
—Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from the report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

December HECM endorsement volume fell again, to 2,786 units, nearly half the unit count from a year ago, and the lowest tally since late 2019. Geographically, the monthly decline was greatest in the Santa Ana Homeownership Center at -21.4%; the decline in the Atlanta Homeownership Center was down just 0.6%. Our report can be found here: NV Endorsement 2022_12.

HUD’s November Endorsement Snapshot Report was just released on its website. HECM refis fell to 17.2% of all endorsements. Despite the dramatic decline since the start of 2022, refinance volume is still higher than the all-time lows recorded during 2018 and 2019 when H2H refis accounted for just 5% of total volume.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:
—Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
—WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
—Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples of our WBWFW report are at the end of the writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

The downward trend continues in HECM endorsement count, which fell 7% to 3,272 units in November. Reverse Mortgage Funding (RMF) filed for bankruptcy Wednesday, the impact of which will start to reveal itself in next month’s tallies. Our report can be found here: NV Endorsement 2022_11.

HUD’s October Endorsement Snapshot Report was just released on its website. HECM refinance activity dropped to 20% of total endorsements. RMF had been one of the most active in sponsoring loans originated by another party. It remains to be seen who will take over after their departure from the industry.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:
—Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
—WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
—Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited WBWFW report samples are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

September’s HECM endorsement volume tanked, to just 3,235 units, approximately half of the high observed in March 2022. Our report can be found here: NV Endorsement 2022_09. Compared to August, top originators American Advisors Group, Finance of America Reverse, and Longbridge Financial saw endorsements drop by 50%, 45%, and 72%, respectively. Mutual of Omaha stood out, as their volume dropped only 7% for the month. By Homeownership Centers, Santa Ana’s endorsement volume dropped 51%, while other centers experienced reductions ranging from 35% to 41%.

HUD’s August Endorsement Snapshot Report was just released on its website. As expected, the share of HECM refis dropped again, down to 32% of all endorsements. Expect this trend to continue.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:
***Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
***WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
***Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

August’s HECM endorsement count bounced back to 5,727 units, up 16% from last month’s 4,928 count. Longbridge Financial endorsed 931 loans, reaching its all-time high and almost tripling volume from one year ago. Market leader American Advisors Group (AAG) had 1,222 endorsements, 19% lower than the approximate 1,500 units it endorsed 12 months ago. AAG, which has had a consistent market share of 30%+ since 2019, in August accounted for only 21% of total endorsement volume. Our full report can be found here: NV Endorsement 2022_08.

HUD’s July Endorsement Snapshot Report was just released on its website. HECM to HECM refis were 38% of all endorsements, a level not seen since Q4 of 2020. The long term average H2H refi share is 20%, so expect to see more refi burnout as the industry (hopefully) returns to its historical mean.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:

–Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
–WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
–Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

July saw 4,928 HECMs endorsements, the first time endorsements dropped below 5,000 units since October 2021. Longbridge Financial and Traditional Mortgage Group both had endorsement counts increase 30% over June, but the other lenders all experienced meaningful unit count drops.  Our complete report can be found here:  NV Endorsement 2022_07.

The Santa Ana Homeownership Center saw a 23.8% drop in endorsements, while the other offices experienced drops near 10%. Without exception, all major western field offices, including Los Angeles, Phoenix, Las Vegas, Santa Ana, San Francisco, and San Diego, saw significantly fewer endorsements than June.

HUD’s June Endorsement Snapshot Report was just released on its website. As expected, HECM refi volume declined again, now accounting for less than 42% of all endorsements. Expect this trend to continue, especially with now slowing HPA.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:
—Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
—WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
—Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.