June 2023 and June 2024
The ebb and flow of industry activity is easily seen when comparing RMI data on industry performance between June 2023 and June 2024. A year ago, American Advisors Group (AAG) was the top lender, originating 8,085 HECM loans in the 12 months ending June 30, 2023. A year later, Finance of America (FOA), which acquired AAG, maintained its position, but recorded roughly 500 fewer approvals in the past 12 months.
John Lunde
The industry-leading Pacific/Hawaii region saw 700 loans closed in June 2023, but a year later that number dropped to 594. Additionally, the number of active lenders increased by 18 in June 2023. A year later, there was no increase in active lenders. Competition and recommendations increased in 2023, but both metrics declined in 2024.
Lunde said these figures represent “the truth of where we are right now,” but explained that it's necessary and interesting to evaluate the context behind these developments.
“I think there's always an interesting context to how the numbers got there,” he said. “Some of the data points you mentioned, like the AAG-FOA merger, it would have been a no-brainer at the time of the acquisition to say you were combining the largest wholesale lender with a strong retail presence with the strongest retail lender by volume over the last few years. Combining those two seems like it would create an industry giant, but that didn't happen.”
We have a team of people who demonstrate positive performance
While the industry probably expected more from such a combination, Lunde said there will be success stories. Mutual of Omaha Mortgage, for example, has emerged as the second-largest lender in the reverse mortgage space. The company grew its overall HECM approvals between June 2023 and 2024.
“They entered the industry several years ago with clear advantages: a great brand name, a long history and a large customer base outside of Reverse,” Lunde says. “We're looking at what those advantages can bring to the table in a tough interest rate environment.”
Lunde said assessing companies that are performing well in the current environment boils down to a few common factors: Firms that enter or acquire existing reverse mortgage teams can leverage advantages outside the industry and apply them to their own reverse operations, for example.
“We're seeing similar things happening elsewhere, like Guild Mortgage acquiring Cherry Creek Mortgage,” Lunde said, “or Harlan Accola and his team doing a lot of good work with a couple of companies and now moving over to Movement Mortgage, where we're starting to see activity and growth.”
This has been a “significant part” of the industry's dynamics over the past year and has served as an avenue for growth. “Frankly, I think this is one of the main sources of growth for the industry going forward,” Lunde said.
Every player has a story
There are also players in the sector who have emerged with a focus on reverse and have been successful in maintaining their positive momentum, he added.
“There are companies like Longbridge Financial that were founded many years ago and have a reverse-centric approach,” Lunde says. “They've put together a great team of veterans with lots of experience in the industry. They've been able to do great things without having to leverage a large team of forward loan officers or an existing brand name or customer base outside of reverse.”
Lunde and RMI recognize that there are vastly different stories unfolding across the industry, especially when it comes to how it has addressed the various challenges since the financial crisis of the late 2000s (including the COVID-19 pandemic) and other realities such as the changes to the HECM program handed down by the FHA.
“There are multiple paths to growth in the industry, and each company named in our lender report has a unique story,” Lunde said. “From my perspective, they fit into a particular category or segment because of the approach they're taking. From an outside perspective, I'm impressed with what some of these companies have done.”