Despite a raft of what might seem like contradictory economic data points and a challenged housing market, the reverse mortgage industry largely proceeded as normal based on key performance metrics for May 2025.
Home Equity Conversion Mortgage (HECM) endorsements dropped by 1% in May to 2,296 loans, despite recent increases in the expected interest rate alongside solid performance from some key lenders.
Meanwhile, HECM-backed Securities (HMBS) issuance saw a modest increase of $9 million month over month despite remaining in historically low territory.
This is according to HECM endorsement data compiled by Reverse Market Insight (RMI), and HMBS issuance data from Ginnie Mae and private sources compiled by New View Advisors.
HECM endorsements: steady despite headwinds
When asked about why business has remained so stable, RMI President John Lunde said that while originators can offer their own thoughts, his own sense is that it’s tied to the nature of where the broader market and economy have been for a while.
“My hypothesis is that we’re basically at a place where home values have gone up so much that even with interest rates restricting the principal limits these past few months, this is still a compelling option for the core HECM borrower profile,” Lunde said.
“Volume isn’t higher because we’ve lost the vast majority of refis, and the upfront cost versus available principal limit is a much harder sell at these levels for potential borrowers that are more strategic and planning oriented.”
Another encouraging sign for the business at large is the fact that retail reverse mortgage origination has a new player that is well versed in the nature of the specific business and is now scaling to include a dedicated retail division. GoodLife Home Loans recently announced that it would open its own retail channel after years of a consistent wholesale presence.
When asked if this might factor into the broader business over the coming months, Lunde said that GoodLife is showing signs of momentum that may be bolstered by a more prominent retail presence.
“I’m looking forward to seeing them perform on the retail side after a long track record on the direct and wholesale sides,” Lunde said. “They’ve risen above Liberty Reverse Mortgage on this report, so this could help them keep that upward momentum, although they have a ways to go before challenging Longbridge Financial for the No. 3 spot.”
When asked about historic data — specifically about how 2025 is coming together in comparison to other recent post-pandemic years — Lunde was bullish, with an asterisk of sorts.
“[2025 is going] better than expected if we had known the path of interest rates heading into the year,” he explained. “It does feel a lot like a ‘new normal’ equilibrium post-pandemic, so we would do best to ignore interest rates as much as possible given they’re out of our control.”
Echoing sentiments shared by other industry leaders recently, the name of the game in the months and years ahead is the business’s distribution profile.
“Expanding distribution remains the key to growing volume and a more controllable source of business for the industry than hoping for interest rates to cooperate,” he said. “I think we’re seeing the benefits of that sustained focus by the more successful companies this year.”
Lunde and RMI speak regularly with industry participants at multiple levels, and those conversations are largely coming with an acknowledgement of current market challenges, he said.
“I’m hearing a lot of similar sentiments where rates are really constraining loan volume, but the secondary market is providing good support to revenue,” he explained. “If rates surprise by dropping a bit, I’m sure that would be a welcome tailwind.”
HMBS issuance: steady at historic lows
Regarding the secondary market, New View Advisors partner Joe Kelly stated that the business is remaining steady while still operating at historic lows in comparison to recent years.
“Yes, it is holding steady at a low level,” he said. “We reiterate our guidance of no material increase in HECM/HMBS origination volume without a significant reduction in the Initial Mortgage Insurance Premium (IMIP).”
That stability extends to the HMBS issuer league rankings, which has consistently featured Finance of America at the top of the list for quite a while. New View “see[s] no reason for the rankings to change materially without any new entrants (or exits),” Kelly said.
But one potential hiccup on the secondary side is the general lack of action on HMBS 2.0, the complementary Ginnie Mae reverse mortgage securities program that saw a fast-tracked development cycle during the Biden administration. The plan has not had any public progress since last November.
“We advise [industry participants] to prepare for a delay in HMBS 2.0 implementation, which means continue to seek buyout and other special financing,” Kelly said.
Despite the steadiness and other market realities, New View largely expects HMBS issuance to land in the same territory that was seen at the end of 2024.
Last year, HMBS issuance totaled $3.95 billion, which was described in January by New View as “the lowest HMBS issuance year since the program’s infancy in 2008” after subtracting tail issuance.
Still, reverse mortgage professionals should “be prepared for the unexpected, including higher interest rates and HMBS 2.0 postponement,” Kelly said.
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