Weekly Real Estate News
Summary
September HECM endorsements fell 6.7% to 1,790, the lowest monthly total since April 2020, while HMBS issuance declined 17% to $446 million, underscoring continued pressure across the reverse mortgage market.
The federally insured reverse mortgage market lost more ground in September, with endorsement volume falling to its lowest monthly level since the early months of the pandemic and secondary-market issuance also retreating.
Home Equity Conversion Mortgage endorsements fell 6.7% from August to 1,790 loans in September, according to data compiled by Reverse Market Insight. That was the lowest monthly endorsement total since April 2020.
The secondary market weakened at the same time. New View Advisors reported HECM Mortgage-Backed Securities issuance of $446 million in September, down 17% from the prior month.
The two measures track different parts of the reverse-mortgage business, but their simultaneous decline points to a soft month across both FHA-insured production and securitization.
HECM volume falls below February’s weak reading
September’s 1,790 endorsements were even lower than February, when endorsements fell 20.7% to 1,821 loans. February had already been one of the weakest months in recent years.
The comparison matters because monthly HECM production can be volatile. Endorsements reflect FHA insurance activity rather than a real-time count of applications or closings, and timing effects can move loans between reporting periods. Still, falling below the February total puts September’s weakness in perspective.
The market has also been adjusting to a changing competitive landscape. Proprietary reverse-mortgage products have taken a larger share of senior-home-equity lending, giving borrowers and originators alternatives to the FHA-insured HECM program in situations where loan size, property value or product structure favor a private product.
Secondary-market issuance also contracts
September’s $446 million of HMBS issuance was down 17% from August, according to New View Advisors. Finance of America remained the leading issuer.
HMBS issuance is an important funding mechanism for HECM lenders because it provides liquidity by pooling eligible reverse-mortgage participations into Ginnie Mae securities. A decline does not translate one-for-one into originations, but sustained weakness can provide another view of the amount of FHA-insured reverse-mortgage collateral moving through the market.
The September figure was slightly above February’s $431 million, which New View had described as the lowest monthly issuance total in two years at the time.
A difficult rate environment remains part of the backdrop
Reverse mortgages operate differently from traditional forward mortgages, but they are not insulated from interest rates. Higher rates reduce the principal limit available to a HECM borrower for a given age and home value, affecting proceeds and potentially the attractiveness of the transaction.
The September downturn arrived as borrowing costs across housing moved sharply higher. WRE News has reported on the renewed rise in long-term Treasury yields and mortgage rates, a backdrop that affects home-equity products as well as purchase and refinance lending.
The longer-term question is whether September represents another temporary low in a volatile year or a more durable shift away from FHA-insured HECMs. The answer will depend partly on rates, but also on how quickly proprietary products continue expanding and whether the large amount of equity held by older homeowners translates into stronger borrowing demand.
