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M R EP O RT | 37 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 HECM Endorsements Surge in May More than 5,000 HECM loans closed in May— best single-month total in two years. A report published by Reverse Mortgage Daily found Home Equity Conversion Mortgage (HECM) endorsements rose in May, reaching 5,038 loans and marked the best single-month total in more than two years. These numbers represent data released by the Department of Housing and Urban Development (HUD) and compiled by Reverse Market Insight and New View Advisors. This rise also is a 214.7% increase when compared to April's numbers, which recorded just 1,601 loans. "Last month, we weren't de- pressed by incredibly low April HECM endorsement numbers, and this, month we look at the figures as catching up rather than some new trend," RMI said on the report. Reverse Mortgage Daily's report took a closer look at the endorse- ment drop in April's data, with some sources speculating that part of the decline could be attributed to the lack of representation that reverse mortgages have in the HECM data. "[That] doesn't seem likely," said Michael McCully, partner at New View Advisors. "If anything, private production had a bigger, albeit temporary, disruption than HECM, as two of four private lenders dropped out of the market in March-May. While some private product certainly eats into HECM volume, there is not a lot of overlap between HECM and private product borrowers." As HECM endorsements rose so have mortgage applications, ac- cording to the Mortgage Bankers Association (MBA). Applications rose 2.7% from the prior week for the week ending on May 22, 2020. "Despite mortgage rates hover- ing near MBA's all-time survey low, refinance activity was essentially flat but still 176% higher than last year. Conventional refinance applications increased 2%, while government refinancing was down almost 7%," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. The refinance share of mort- gage activity decreased to 62.6% of total applications from 64.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.4 percent of total applications. New-Pending Home Sales, Listings Increase Inventory is down 24.9% annually so far in 2020. Z illow reported that new- ly-pending home sales fell 5.2% from the prior week. This represents a slight improvement from 7.1% weekly decline recorded during the same week in 2019. Monthly, newly-pending sales are up 24.5% nationally and are positive in each of the top-35 met- ros where data is available. New listings are up 19.3% from the prior month but are down 17.2% year-over-year. Total housing inventory is down 24.9% an- nually—marketing the biggest year-over-year drop in 2020. Zillow states the median list price for the month is $329,941, which is 3.1% higher than in 2019 and up 0.3% from the prior week. List prices are higher than 2019 in 29 of the 35 largest metros. Cincinnati reported the largest year-over-year list-price increase, growing 17.6%. Detroit's 3.7% de- cline as the largest in the nation. In a Zillow survey of 106 econo- mists, 41% said they think the eco- nomic recovery from COVID-19 will follow a "U" shape while 33% said it will be a multiyear return. Prices nationally are projected to fall 0.3% in 2020, according to the panelwide average forecast— down from an expected increase of 3.3% just three months ago. "This is the first time since 2012 that the panelwide price outlook has turned negative, and the quar- ter-to-quarter swing in expecta- tions is the largest we've seen in more than a decade," said Terry Loebs, founder of Pulsenomics in the Zillow survey. "Longer term, the outlook for home values na- tionwide is mixed—price projec- tions for 2022 and beyond actually inched higher from levels record- ed prior to the Covid-19 outbreak. However, nearly seven in ten experts now indicate that their five-year forecast has downside risk. Last quarter, fewer than four in ten panelists foresaw down- side—of course, that was before the Covid-19 crisis, its economic devastation, and unprecedented government response." Zillow's forecast calls for a 1.8% decline in home prices by October 2020, with prices ex- pected to return to pre-pandemic levels by Q 3 2021.