TheMReport

TH E M R EP O RT | 35 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION What's Ahead for HECM Volume? Here's why the recent dip in home equity conversion mortgage could be a short-term one. H ome Equity Conversion Mortgage (HECM) en- dorsements dropped by 35.7% in March, down to 2,573 loans. In their report, Reverse Mortgage Insight (RMI) stated, "That is certainly a lot, but is actually very close to the aver - age for December through Febru- ary we discussed as a way of reducing the noise of the govern- ment shutdown shifting volume between those months. Now that we finally have a clean month it looks like the last five months on average have all been right around this month's level." By region, the Pacific/Hawaii re - gion saw the smallest drop, down 18.6%, or 783 loans. RMI noted this region was still up 15.7% from the December through February aver - age. The Southwest had the big- gest drop but still came out 10.1% higher than the December through February average. MReport's sister publication, DS News, previously reported that, according to LendingTree and data from the Federal Housing Authority's HECM program, there were 7.1 HECM loans originated per 1,000 homeowners over the age of 60 between 2012 and 2017. The top city, Virginia Beach, boasted a rate of 13.8 loans per 1,000 home - owners over the age of 60. Government-backed loans as a whole have seen a resurgence. Kroll Bond Ratings Agency reported a 63% increase in resi - dential mortgage-backed securi- ties (RMBS) issued from 2017 to 2018. The report indicated that if the U.S. GDP was to grow at the steady pace it has this year, until July 2019, the year could see "another robust issuance year in 2019." However, factors such as higher interest rates, home price moderation, and widening spreads that have occurred recently are headwinds that might pull down the performance of RMBS, the report revealed. "Given the potential downside risks, we aren't forecasting issuance growth in 2019, but believe issuance will be comparable to 2018 levels," KBRA stated in the outlook. Turning on the Heat Feeling the impact of a competitive market, HELOC lenders are wooing customers with enhanced digital experiences and quick turnarounds. T he personal loan market is booming with an esti- mated $141 billion in loans made in 2018 and a 40% rise in the number of loans over the last four years, according to J.D. Power. Just what does this boom mean for housing finance? Well, it could take a bite out of home equity lines of credit (HELOCs). Customers are seemingly more satisfied with their personal loans than their HELOCs, according to results from the J.D. Power 2019 Personal Loan Satisfaction Study. On a 1,000-point satisfaction scale, customers rated personal loan providers with a score of 853 compared to a score of 834 in J.D. Power's 2019 Home Equity Line of Credit Satisfaction Survey. Not only does a lower score translate to fewer customer refer - rals, but also J.D. Power found that customers "will consider alterna- tive products," meaning when shopping for a personal loan, some customers also consider other types of loans, such as HELOCs. About 47% of personal loan shoppers reported considering other types of loans, with 28% contemplating credit cards, 17% pondering personal lines of credit, and 13% considering HELOCs. As for what's earning per - sonal and alternative lenders high customer satisfaction, the answer, according to J.D. Power, lies in the digital realm. "[M]any of these alternative lenders are upping the ante on customer satisfaction by outper - forming lenders that provide more traditional types, such as home equity lines of credit (HELOCs), through superior digital experi- ences and lightning-fast approv- als," J.D. Power stated with the release of its 2019 Personal Loan Satisfaction Study. A majority of personal loan applicants applied digitally with 40% applying entirely online, and J.D. Power found that satisfaction was even higher among these customers. Those who applied online rated their personal loan experience at 886 compared to the overall 853 for all personal loans. "From a digital perspective, traditional banks need to work hard to meet evolving customer expectations," said John Cabell, Wealth and Lending Intelligence Practice Lead at J.D. Power. Those who applied for loans digitally also reported a high rate of understanding of their loan application with 91% of ap - plicants saying they "completely understood the application." Understanding the application correlated with a 137-point higher satisfaction rating, according to J.D. Power. Timeliness also, naturally, makes a difference to customers. Those who receive loan approval within two days of completing their application tend to rate their satisfaction about 55 points higher than those whose approval takes longer. Those who receive their funds within two days of approv - al give satisfaction scores about 50 points higher than others. HELOC loans generally don't come close to these timelines. The average HELOC customer receives funds within 26 days of completing their application. The report indicated that if the U.S. GDP was to grow at the steady pace it has this year, until July 2019, the year could see "another robust issuance year in 2019."

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