The reverse mortgage industry was more than ready to turn the corner from the tumult of 2024. And the first month of 2025 brought technical positivity in key performance metrics while still remaining relatively unchanged overall.
Home Equity Conversion Mortgage (HECM) endorsements increased by 0.6% from December 2024 to January 2025, with 2,641 loans endorsed last month, according to data compiled by Reverse Market Insight (RMI).
Meanwhile, HECM-backed Securities (HMBS) issuance increased by $13 million during the month for a total of $588 million in January. There were 85 pools issued, 10 more than in December, according to Ginnie Mae data and private sources compiled by New View Advisors.
HECM endorsements
When asked about how data and client conversations have been progressing at the start of the year, Jon McCue, RMI’s director of client relations, told HousingWire’s Reverse Mortgage Daily (RMD) that things are largely proceeding as expected on the endorsement side.
“Applications were on the rise for four months in a row through October, which was the last month HUD published this information,” McCue said. “However, they have since removed October application data now for some reason. Without further application data, it is difficult to forecast what we can expect for the next few months, but with the rise in the 10-year CMT it wouldn’t be surprising to see endorsements begin to drop again at least in the short term.”
In its commentary accompanying the data, RMI speculated that the very slight increase in HECM endorsements last month could be indicative of the industry operating on “borrowed time,” stemming from a brief decline in the 10-year Treasury rate observed late last year. When asked how much “borrowed time” there is, McCue indicated there likely isn’t much.
“In fact, I wouldn’t be surprised to see a decent drop in February given that it is the shortest business month of the year, and it would fall in line with the increase in rates,” he said.
RMI tracks 10 different geographic regions in its assessments of HECM endorsements, and the Rocky Mountain region had a notable 22% increase in endorsements over December’s figures. This made it the “clear winner” for the month, but a lack of data makes it difficult to attribute a cause at the moment, McCue said.
Lender moves
Five of the top 10 lenders managed to grow their endorsement volume month over month. Finance of America (FOA) managed to pull ahead of Mutual of Omaha Mortgage to claim the top spot for January. But Mutual of Omaha is still the industry leader in terms of raw endorsement figures over the past year, and competition between the two is likely to remain fierce, McCue said.
“You have two powerhouse organizations that are well led, so I would certainly expect this to be neck and neck for quite a while,” he explained.
Goodlife Home Loans and Guild Mortgage each posted substantial month-over-month growth in January, with Goodlife rising more than 113% to 179 loans while Guild shot up more than 87% to 105 loans for the month.
“Both of these companies have great things happening, and between the two, Guild has a huge forward side they are still working to tap into,” McCue explained. “They definitely have a lot of opportunities for upward growth.”
When asked about other factors that could impact the industry over the next few months, McCue mentioned the wildfires in California, as well as the recent political transition to the second Trump administration and its potential impacts on operations at the U.S. Department of Housing and Urban Development (HUD).
“There is a lot of opportunity in many areas of California, and not just the recently affected areas,” McCue said. “Every time we get these huge losses, it will impact volumes, but it takes time to see by how much.”
HUD is continuing to operate, and so as long as that continues to be the case, then rates will be more top of mind, he said.
“[Rate movements pose] the million-dollar question [for the year], and if I had the definitive answer, I would be the most popular person in mortgages,” he said. “However, it is looking like we probably shouldn’t be expecting any large rate decreases anytime soon.”
HMBS issuance
HMBS issuance in January continued a trend of being “range bound,” according to New View’s commentary that accompanied the data. Issuance is now “barely half” of the roughly $1 billion per month average during the post-pandemic HECM-to-HECM refinance boom of 2020 to 2022, and it is well below the average of $700 million per month observed for much of the eight years before that.
But the issuance market remains in a generally good place despite these facts, according to New View partner Michael McCully.
“Despite low HECM origination volume, the HMBS market remains healthy,” he told RMD. “It is too soon to know how the market will progress in 2025.”
January saw $406 million in production of first-participation HMBS pools, an increase of $17 million over December. There were 27 pools with an aggregate pool size of less than $1 million, stemming from a policy change in 2024 that allows for pools with sizes as small as $250,000. Both of these metrics are positive for the overall health of the HMBS market, McCully explained.
“There remains a healthy bid for both first participation and tail securities,” he said. “[The smaller-pool policy] is a welcome improvement for smaller issuers, less so for the top four but still a ‘nice to have’ for all.”
Despite the health of the market at the moment, the industry is still eagerly anticipating the further rollout of HMBS 2.0. Ginnie Mae issued a final term sheet for the program late last year.
Prior reporting from RMD has suggested that implementing the program could be a challenge, stemming from leadership changes at federal housing agencies as well as the potential impacts of a federal hiring freeze handed down by an executive order from the White House.
Whenever the program gets across the finish line, however, “HMBS 2.0 could almost double current issuance levels,” McCully said.
