Volume of the FHA’s Home Equity Conversion Mortgage (HECM) grew to $30.2 billion in Fiscal Year 2009 according to budget documents released earlier this week.
Despite only a slight increase in endorsed units, max claim volume grew 25% compared to the prior Fiscal Year total of $24.2 billion.
According to data from Reverse Market Insight, 22% of the increase in volume comes from the lending limit increase, and the remaining 3% stems from the additional units in FY 2009. In addition, the shift to the fixed rate product has also been a factor.
“The shift to the fixed rate product further magnifies the increased dollar volumes spurred by higher lending limits, as the unpaid principal balance (UPB) is up 31% for FY 2009,” said John K. Lunde, President of RM Insight.
“At a time when declining home values and recession dominated the headlines, our industry acted as a key safety net for seniors and provided more funds to more customers in FY 2009 than ever before.”
Looking at the calendar year numbers is even more telling, while units were down 2.9% in 2009, the max claim amount and UPB totals were up 26% and 42% respectively from the last year.
Whether or not the industry will continue to grow in Fiscal Year 2010 is another story. The Office of Management and Budget is predicting the industry will endorse 120,429 units in 2010 while FHA’s Outlook Report shows a prediction of 106,875 units for FY 2010.
