New View Advisors and Recursion Reverse Mortgage Prepayment Indices – April 2022

May 11th, 2022

The New View Advisors and Recursion April 2022 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 04_2022. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This new expanded set of prepayment data is calculated using dollar principal balance, not unit count.

The enhanced data set shows current trends in prepayment activity by product type and Principal Limit Factors (PLFs), and for current 12-month LIBOR PLFs by Expected Rate. HECM loans with higher Expected Rates originated in the year or so prior to the precipitous fall in interest rates brought on by the pandemic are experiencing higher prepayment rates. Therefore, we segregate indices for recent production 12-month LIBOR PLFs into Expected Rates greater than 4% and Expected Rates less than or equal to 4%.

Prepayment speeds are expressed as annualized percentages in three categories: Total Payoffs, Payoffs Other Than Assignments, and Payoffs from Assignment. For each category, we calculate the 1-month, 3-month, 6-month and 12-month CPR, or annual rate of prepayment.

HMBS April 2022 Part II: April May but May June?

May 10th, 2022

HMBS payoffs continued in April, as the refinancing wave diminished slightly but refused to ebb. Instead, April payoffs totaled $1.3 billion, just short of March 2022’s record $1.5 billion. Outstanding HMBS rose to a record $58 billion, with strong new issuance and a faster roll-up from rising interest rates.

HECM borrowers continue to refinance in large numbers, assisted by a higher HECM lending limit (now $970,800) and surging home prices (nearly 20% year-over-year, according to some measures). So far, rising interest rates have failed to calm reverse mortgage refinancings. The $1.3 billion in payoffs in April represents a 24% annual payoff rate.

However, April may be the beginning of the end of H2H refis. Given the lag between HECM loan origination and HMBS issuance, the new HECMs backing April’s HMBS pools do not fully reflect the rapid rise in interest rates over the past two months. The numbers for May and June will test the resilience of this refinancing wave, which began with lower interest rates but continued its momentum from the strong home price appreciation and higher FHA lending limits.

While 2021 surpassed all previous records with $13.2 billion HMBS issued, its record may yet fall: over $5.6 billion was issued in the first four months of 2022.
Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $256 million, 20% of the total.

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

HECM Endorsement Analytics – April 2022

May 3rd, 2022

6,265 HECMs were endorsed in April, showing just a 3.8% drop from March’s record setting month. Geographically, only Denver saw a volume increase, from 1,295 to 1,536 units, while Atlanta, Philadelphia, and Santa Ana all had small decreases. Our complete report can be found here: NV Endorsement 2022_04.

HUD’s March Endorsement Snapshot Report was just released on its website. As expected, HECM loan rates are rising rapidly. Both HECM Refinances and Traditional HECMs contributed to the large increase in endorsement count from February to March. HECM Refis continue to account for roughly half of total endorsement volume.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our 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:

1.  Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
2.  WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
3.  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 April 2022: April Showers Bring A New Record, What May Happen Next?

May 2nd, 2022

HECM Mortgage-Backed Securities (“HMBS”) issuers set another new record in April, issuing over $1.6 billion in new HMBS. This shatters the previous mark by nearly $300 million. Refinancing continues to drive this record HMBS volume.

Given the lag between HECM loan origination and HMBS issuance, the new HECMs backing April’s HMBS pools do not fully reflect the rapid rise in interest rates over the past two months. The numbers for May and June issuance will test the resilience of this refinancing wave, which began with lower interest rates but continued its momentum from strong home price appreciation and higher FHA lending limits.

HMBS issuance totaled $13.2 billion for 2021, 22% more than the previous record set in 2010. With only four months in the books and over $5.6 billion issued, HMBS is on pace to set another new record in 2022.

April’s original (first participation) production smashed previous monthly volume records, with $1.4 billion in new issuance. This easily exceeded March’s production of original new loan pools totaling $1.13 billion, February’s $1.12 billion and January’s previous record of $1.18 billion. Approximately $900 million in original new loan pools were issued a year ago, in April 2021. Last April’s total set a record, yet this April exceeds it by half a billion dollars.

113 pools were issued in April: 67 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 and FHA mortgage insurance premiums. Last month’s tail pool issuances totaled $217 million, within the typical range.

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

New View Advisors and Recursion Reverse Mortgage Prepayment Indices – March 2022

April 11th, 2022

The New View Advisors and Recursion March 2022 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 03_2022. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This new expanded set of prepayment data is calculated using dollar principal balance, not unit count.

The enhanced data set shows current trends in prepayment activity by product type and Principal Limit Factors (PLFs), and for current 12-month LIBOR PLFs by Expected Rate. HECM loans with higher Expected Rates originated in the year or so prior to the precipitous fall in interest rates brought on by the pandemic are experiencing higher prepayment rates. Therefore, we segregate indices for recent production 12-month LIBOR PLFs into Expected Rates greater than 4% and Expected Rates less than or equal to 4%.

Prepayment speeds are expressed as annualized percentages in three categories: Total Payoffs, Payoffs Other Than Assignments, and Payoffs from Assignment. For each category, we calculate the 1-month, 3-month, 6-month and 12-month CPR, or annual rate of prepayment.

HMBS March 2022 Part II: Refi Wave Refuses To Go Quietly

April 11th, 2022

HMBS payoffs roared in like a lion in March, due to a refinancing wave that refuses to go away. March 2022 smashed previous records with $1.5 billion in payoffs. Because of these payoffs, outstanding HMBS fell to $57.59 billion, despite strong new issuance.

HECM borrowers continue to refinance in large numbers, assisted by a higher HECM lending limit (now $970,800) and surging home prices (nearly 20% year-over-year, according to some measures). So far, rising interest rates have failed to calm this reverse mortgage refinancing phenomenon. The $1.5 billion in payoffs in March represents a 27% annual payoff rate.

While 2021 easily surpassed previous annual issuance records with $13.2 billion of total HMBS issuance, 2021’s record may fall: over $4 billion was issued in the first quarter of 2022.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled just $254 million, a record low 17% of the total.

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

HECM Endorsement Analytics – March 2022

April 6th, 2022

6,510 HECMs were endorsed in March, the first time monthly endorsements exceeded 6,000 since late 2017, when the industry was racing to close loans before ML 2017-12 took effect. The March tally is an impressive 26.3% increase over February. Increases were across the board geographically, and among top lenders. Our report can be found here: NV Endorsement 2022_03.

HUD’s February Endorsement Snapshot Report was just released on its website. As interest rates continue to rise, the average interest rate on HECMs appears to have passed its trough.  H2H refis remain high.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our 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.

2022 Q1 HMBS Issuer League Tables – Back to (the New?) Normal

April 5th, 2022

AAG returned to the #1 HMBS issuer slot in 2022Q1, with $899.0 million issued and 22% market share, squeaking past FAR at #2 with $888.5 million and a 21.8% market share. Longbridge remained in third with $744.9 million issued and 18.2% market share, RMF was fourth with $735.8 million issued and 18.0% market share, and PHH rounded out the Top Five, with $583.9 million issued for a 14.3% market share.

Consistently, these same five issuers again accounted for 94% of all HMBS issuance. There were 12 active HMBS issuers in the quarter, with Nationstar out of the business and Cherry Creek Mortgage not issuing, at least for now.

2022Q1 saw $4.08 billion of HMBS issued, up 4% from last quarter’s record $3.91 billion, and the fifth consecutive quarterly issuance record. As mentioned in many of our blogs, $13.2 billion of HMBS issuance in 2021 beat 2010’s previous record $10.8 billion; at this run rate, 2022 will easily surpass 2021.

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

 

HMBS Marches On – March 2022

April 1st, 2022

HECM Mortgage-Backed Securities (“HMBS”) issuers continued their record pace in March 2022, again issuing nearly $1.4 billion in new HMBS, again almost setting a record for new original loan pools for the sixth month in row. Refinancing activity remains strong.

HMBS issuance totaled $13.2 billion for 2021, 22% more than the previous record set in 2010. With three months in the books, HMBS issuance is on pace to set a another new record in 2022.

For the past several months, original (first participation) production has been remarkably consistent. March’s production of original new loan pools totaled $1.13 billion, just above February’s $1.12 billion and consistent with January’s record $1.18 billion, December’s $1.14 billion, November’s $1.08 billion and October’s $1.07 billion. Approximately $671 million in original new loan pools were issued a year ago, in March 2021.

109 pools were issued in March: 54 first-participation or original pools, and 55 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 and FHA mortgage insurance premiums. Last month’s tail pool issuances totaled $225 million, within the typical range.

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

New View Advisors and Recursion Reverse Mortgage Prepayment Indices – February 2022

March 10th, 2022

The New View Advisors and Recursion February 2022 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 02_2022. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This new expanded set of prepayment data is calculated using dollar principal balance, not unit count.

The enhanced data set shows current trends in prepayment activity by product type and Principal Limit Factors (PLFs), and for current 12-month LIBOR PLFs by Expected Rate. HECM loans with higher Expected Rates originated in the year or so prior to the precipitous fall in interest rates brought on by the pandemic are experiencing higher prepayment rates. Therefore, we segregate indices for recent production 12-month LIBOR PLFs into Expected Rates greater than 4% and Expected Rates less than or equal to 4%.

Prepayment speeds are expressed as annualized percentages in three categories: Total Payoffs, Payoffs Other Than Assignments, and Payoffs from Assignment. For each category, we calculate the 1-month, 3-month, 6-month and 12-month CPR, or annual rate of prepayment.