HECM Endorsement Analytics – July 2020

August 3rd, 2020

HUD’s July 2020 HECM Endorsement Summary Report shows no signs of HECM endorsements slowing down: NV Endorsement 2020_07.  July closed out with 4,256 endorsements, the third consecutive month over 4,000. The last time this happened was in the fourth quarter of 2017, during the surge of volume associated with Mortgagee Letter 2017-12.

Based on 12-month endorsement totals, the ranking of the top 15 originators for July 2020 remained the same as June. As with HMBS issuance, AAG has a commanding lead over #2 RMF and #3 FAR. Longbridge saw unit count more than double in July, to 199 loans endorsed from last month’s 97. On the other hand, High Tech Lending’s endorsement count fell 44%, to 95 units from last month’s 169.

HUD’s June 2020 Endorsement Snapshot Report has now been posted on its website. While HUD’s Snapshot Report has a 1-month lag, it too shows no notable changes in trends with regard to endorsement volume, product mix, or loan characteristics.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of this endorsement report subscription. The report compiles publicly available Ginnie Mae dollar volume data to show which HMBS issuers buy HECMs from which lenders.

Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

HMBS July 2020: Fireworks Go Boom

August 3rd, 2020

HMBS issuance totaled $1.42 billion in July 2020, nearly a record month and the highest since February 2018. Strong new production and a large seasoned pool led the way. Helped by a continuing recovery in the capital markets and low interest rates, HMBS issuers easily surpassed June’s totals. 77 pools were issued in July.

Reverse mortgage lenders weathered a long period of reduced new origination volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of FY2018. But HECM production steadily recovered, and now new production of HMBS exceeds its long-term average range of $500 – $600 million. Combined with the dramatic fall in default rates and the reemergence of proprietary loans, the reverse mortgage market is stronger than ever. However, this strength may still be challenged by changes in future economic conditions and the transition out of LIBOR.

The HMBS market totaled about $8.3 billion for calendar year 2019, down from $9.6 billion in 2018 and $10.5 billion in 2017. However, securitization of private reverse mortgages is a much bigger factor now. As a result, we estimate that the total issuance of reverse mortgage securities backed by new collateral in 2019 was about the same as 2018. All private reverse mortgage lenders who had suspended their program have resumed lending.

July production of original new loan pools was about $691 million, compared to $593 million in June, $586 million in May, $470 million in April, $455 million in March, $501 million in February, $550 million in January, and a mere $321 million in July 2019.

Last month’s tail pool issuances totaled $175 million, below the typical $200-$250 million range.

July issuance divided into 37 first-participation or original pools and 40 tail pools. Original pools are those HMBS pools backed by first participations in previously uncertificated HECM loans. Tail HMBS issuances are HMBS pools consisting of subsequent participations. Tails are not from new loans, but they do represent new amounts lent. Tail HMBS issuance is essential for HMBS issuers to finance their monthly advances, such as borrower draws, FHA mortgage insurance premiums, etc.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.

HMBS June 2020 Part II: HMBS Float Remains in Equilibrium Just Above $54 Billion

July 9th, 2020

Outstanding HMBS fell by $15 million in June, as payoffs rose and issuance remained strong. Payoffs totaled approximately $927 million, consistent with average monthly payoffs over the last year. Total outstanding HMBS remains at $54.4 billion. Over the last year and a half, this HMBS total has been in a state of equilibrium where new issuance and interest roll-up roughly equal payoffs.

In 2019, HMBS posted the lowest annual total in five years. In recent months, low interest rates and a higher lending limit boosted production significantly, while Mandatory Buyouts continue to fall. But how long can this equilibrium last?

We predicted continuing declines in Mandatory Buyouts, and June was a case in point, with Buyout dollar volume still near its lowest level in nearly 5 years. “Peak Buyout” was an echo of the peak issuance from 2009 through the first half of 2013. Much of this production has already been repurchased by the issuers or repaid by borrowers. Many HECM loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout is long gone.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled just $342 million, another 5-year low. This continues the downward trend from the buyout peak in the third quarter of 2018, which averaged over $750 million in Mandatory Purchases per month.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.

2020Q2 HMBS Issuer League Tables – AAG Maintains Its Lead

July 1st, 2020

AAG maintained its lead in 2020Q2 HMBS issuer rankings, with $1.23 billion of issuance and 27.7% market share. RMF squeaked past FAR into second, with $842.7 million issued and 19% market share. FAR at third had $829.5 million issued and 18.7% market share. PHH Mortgage stayed in fourth, with $590.6 million and 13.3% market share, and Longbridge held fifth with $525.2 million of issuance and 11.8% share. These five issuers continue to account for almost 91% of all HMBS issuance. There remain 13 active HMBS issuers in 2020.

2020Q2 saw $2.35 billion of HMBS issued, up from the first quarter’s $2.09 billion. With HMBS capital markets recovered from the Coronavirus pandemic, and HECM origination volume up, 2020 HMBS issuance is headed for $9+ billion. Total HMBS issuance in 2019 was $8.26 billion.

New View Advisors compiled these rankings from publicly available Ginnie Mae data as well as private sources.

HECM Endorsement Analytics – June 2020

July 1st, 2020

HUD’s June 2020 HECM Endorsement Summary Report shows another strong print with a total of 4,209 endorsements, our summary report of which can be found here: NV Endorsement 2020_06. June is lower than May’s 5,038 count, but as mentioned previously the last two months’ volume figures have been skewed by disruptions caused by COVID-19. During the six months prior to the pandemic, average monthly endorsements ran slightly over 3,000 units per month.

Based on 12-month endorsement totals, there is little change in the ranking of top lenders. Of note, High Tech Lending saw a sharp increase in volume, to 169 units from last month’s 24. One Reverse Mortgage had just 1 endorsement as it winds down business.

HUD’s May Endorsement Snapshot Report is now available on its website. The report echoes last month’s Endorsement Summary Report and displays a strong rebound in activities from April to May across the board.

Refinance volume continues to ramp higher. After taking a breather in May, the refinance endorsement count reached 891, the highest monthly total since January 2018. Refinance volume accounts for about 18% of all endorsements, a trend that started in late 2019.

Edited samples from this month’s WBWFW report are again at the end of our endorsement writeup. Our WBWFW reports provide accurate insight for sales and marketing teams to learn who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

HMBS June 2020: No June Swoon, Too Soon to Call It a Boom? High Noon with LIBOR Looms.

July 1st, 2020

HMBS issuance totaled $766 million in June 2020, with strong new production again leading the way. Helped by a recovery in the capital markets, HMBS issuers essentially equaled May’s strong total and surpassed May in new production issuance. 82 pools were issued in June. There were no highly seasoned pools issued.

Reverse mortgage lenders weathered a long period of reduced new origination volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of FY2018. Over the last year or so, new production of HECMs and HMBS grew back to its long-term average range of $500 – $600 million. Combined with the dramatic fall in default rates and the reemergence of proprietary loans, the reverse mortgage market is stronger than ever. However, this strength may be challenged by economic conditions and the transition out of LIBOR.

The HMBS market totaled about $8.3 billion for calendar year 2019, down from $9.6 billion in 2018 and $10.5 billion in 2017. However, securitization of private reverse mortgages is a much bigger factor now. As a result, we estimate that the total issuance of reverse mortgage securities backed by new collateral in 2019 was about the same as 2018. As further evidence of the recovery, a major private reverse mortgage lender who had suspended their program has resumed lending.

June production of original new loan pools was about $593 million, compared to $586 million in May, $470 million in April, $455 million in March, $501 million in February, $550 million in January, $484 million in December 2019, and a mere $331 million in June 2019.

Last month’s tail pool issuances totaled $172 million, below the typical $200-$250 million range.

June issuance divided into 36 First-Participation or Original pools and 46 tail pools. Original pools are those HMBS pools backed by first participations in previously uncertificated HECM loans. Tail HMBS issuances are HMBS pools consisting of subsequent participations. Tails are not from new loans, but they do represent new amounts lent. Tail HMBS issuance is essential for HMBS issuers to finance their monthly advances, such as borrower draws, FHA mortgage insurance premiums, etc.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.

HMBS May 2020 Part II: Float Remains in Equilibrium Just Above $54 Billion

June 9th, 2020

Outstanding HMBS rose $150 million in May, as payoffs fell and issuance remained strong. Payoffs totaled approximately $770 million, down about $20 million from last month. Total outstanding HMBS has inched up to $54.4 billion. Over the last 18 months, HMBS float has been in a state of equilibrium where new issuance and interest roll-up equal payoffs.

Continuing declines in Mandatory Buyouts are still occurring, with buyout dollar volume near its lowest level in 5 years. “Peak Buyout” was an echo of the peak issuance from 2009 through the first half of 2013. Much of this production has already been repurchased by the issuers or repaid by borrowers. Many HECM loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout is long gone.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled just $344 million, the lowest amount since 2015. This continues the downward trend from the buyout peak in the third quarter of 2018, which averaged over $750 million in Mandatory Buyouts per month.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.

HECM Endorsement Analytics – May 2020

June 1st, 2020

HUD’s May 2020 HECM Endorsement Summary Report shows a total of 5,038 endorsements, the highest monthly endorsement tally we’ve seen in over two years, and a 215% increase from last month’s 1,601. Our summary and analysis can be found here: NV Endorsement 2020_05. Granted, a significant portion of this month’s endorsement volume is likely backlog from April due to the slowdown in loan processing caused by the pandemic. During the six months prior to April, average monthly endorsements ran slightly over 3,000.

The Endorsement Summary Report replaced Synergy One Lending with its parent company Mutual of Omaha Mortgage and our numbers present the combined endorsement count. Similarly, PHH Mortgage Corporation was added to the report as an originator. Even though HUD’s data still shows Liberty Home Equity solution as a separate originator, our report combines their numbers as one line item.

Based on 12-month endorsement totals, the same six lenders occupy the top originator spots from a year ago. One Reverse Mortgage aside, all of these originators have more endorsements today than a year ago. AAG’s endorsement total is now 32% of the market total, up from 29% in May 2019. During the same 12-month period, and still including ORM, the market share of combined endorsements from these six originators increased from 63% to 66%.

HUD’s April Endorsement Snapshot Report is now available on its website. The report shows that most sponsors were quiet in April, however FAR and Longbridge actively sponsored loans originated by another party. FAR sponsored 407 and Longbridge sponsored 103 such loans, compared to 305 and 107 on average respectively over the previous 12 months.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of this endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders. The WBWFW report includes:

  • Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
  • WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
  • Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

HMBS May 2020: May Production Blossoms

June 1st, 2020

HMBS issuance totaled $767 million in May 2020, with strong new production leading the way. Beginning in March, the Coronavirus pandemic took its toll on the capital markets, reducing liquidity as lenders and investors pulled back. However, 91 pools were issued in May, a sharp contrast to the six year low of 77 pools in March, followed by 86 pools in April. There were no highly seasoned new issues.

Reverse mortgage lenders weathered a long period of reduced new origination volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of FY2018. However, over the last year new production of HECMs and HMBS has slowly climbed back to its long-term average range of $500 – $600 million. While March and April fell below that range, the May numbers did not.

The HMBS market totaled about $8.3 billion for calendar year 2019, down from $9.6 billion in 2018 and $10.5 billion in 2017. But, securitization of private reverse mortgages is a much bigger factor now. As a result, we estimate the total issuance of reverse mortgage securities backed by new collateral in 2019 was about the same as 2018. As further evidence of the recovery, a major private reverse mortgage lender that had suspended their program has resumed lending.

May production of original new loan pools was about $586 million, compared to $470 million in April, $455 million in March, $501 million in February, $550 million in January, $484 million in December 2019, and a mere $325 million in May 2019.

Last month’s tail pool issuances totaled $181 million, below the typical $200-$250 million range.

May issuance divided into 43 First-Participation or Original pools and 48 tail pools. Original pools are those HMBS pools backed by first participations in previously uncertificated HECM loans. Tail HMBS issuances are HMBS pools consisting of subsequent participations. Tails are not from new loans, but they do represent new amounts lent. Tail HMBS issuance is essential for HMBS issuers to finance their monthly advances, such as borrower draws, FHA mortgage insurance premiums, etc.

On a side note, this is our 200th blog post, dating back to June 2009.  A modest milestone, but a milestone nonetheless.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.

HMBS April 2020 Part II: Float Remains in Equilibrium Just Above $54 Billion

May 10th, 2020

Outstanding HMBS rose by $185 million in April, as payoffs fell and issuance rose. Payoffs totaled approximately $800 million, down $50 million from last month. For several months, total outstanding HMBS has stayed at about $54 billion, in a state of equilibrium where new issuance and interest roll-up roughly equal payoffs.

In 2019, HMBS posted the lowest annual total in five years. Until last month, low interest rates and a higher lending limit boosted production significantly, while Mandatory Buyouts continue to fall. With the current Coronavirus pandemic crisis, financial markets are dislocated: will this upset the equilibrium at last?

We predicted continuing declines in Mandatory Buyouts, and April was case in point, with Buyout dollar volume again at its lowest level in nearly 5 years. “Peak Buyout” was an echo of the peak issuance from 2009 through the first half of 2013. Much of this production has already been repurchased by issuers, or repaid by borrowers. Many HECM loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout is long gone.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $400 million, the lowest amount in nearly 5 years. This continues the downward trend from the buyout peak in the third quarter of 2018, which averaged over $750 million in Mandatory Purchases per month.

New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.