New View Advisors and Recursion Reverse Mortgage Prepayment Indices – May 2024

June 11th, 2024

The New View Advisors and Recursion May 2024 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 05_2024. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This 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 May 2024 Part II: FAR Ahead

June 11th, 2024

Finance of America has replaced Ginnie Mae as the top HMBS Issuer of record, with $17.2 billion, or about 29.5% of all outstanding HMBS. Along with Ginnie Mae (29%), Longbridge (14%), and Onity (13%), the top four Issuers account for 86% of outstanding HMBS.

As mentioned in previous blogs, Ginnie Mae took over RMF’s HMBS portfolio in December 2022. “Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 3,993 former RMF pools. About $352 million of Issuer 42’s portfolio paid off in May, but Issuer 42 still accounts for $16.90 billion of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 now has approximately $1.1 billion uncertificated position, that is, the excess of their portfolio’s HECM asset balance over the balance of their HMBS liability.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, payoffs last month due to Mandatory Purchases occurred at a rate of 9.7% per annum compared to April’s 9.8% per annum.

Total HMBS payoffs in May showed a slight increase versus April; overall prepayment speeds increased to 18.1% per annum from April’s 17.9% per annum, and 17.3% over the last 12 months. Exclusive of Mandatory Purchases, the rate of HMBS payoffs over the past 12 months is well below the prior 12 months. Natural payoffs (those other than Mandatory Purchases) for the 12 month period ending May 31st were 7.4% per annum, compared to 9.4% for the prior 12 month period.

Outstanding HMBS decreased to $58.3 billion – the sixth consecutive decrease and 14th out of the last 16 months.

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

HECM Endorsement Analytics – May 2024

June 4th, 2024

May was a strong month, posting 2,460 endorsements.  Endorsement activity increased 17% from April, and is at its highest level since October 2023.  Our full report can be found here:  NV Endorsement 2024_05.

HUD’s April Endorsement Snapshot Report was just released.  Over the past two months, HECM to HECM refis rebounded slightly, to 9% of total endorsements.

HMBS May 2024: May The Force Be With You

June 3rd, 2024

The HMBS new issue market continued to inch up in May. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $526 million in May, $23 million higher than April’s $503 million. 86 pools were issued in May, versus 89 in April. Nonetheless, HMBS issuance remains near historical lows, comparing monthly issuance dating back to 2010.

FAR was the top issuer again in May with $157 million – $2 million more than April’s $155 million. Issuance from Longbridge increased by $11 million to $118 million. Mutual of Omaha and PHH issued $106 million and $85 million respectively. Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.

HMBS issuance set a record in 2022, with nearly $14 billion issued. Total issuance for 2023 was approximately $6.5 billion. 2024 is off yet more, with total issuance through May totaling $2.4 billion – $236 million lower than at this time last year and $4.8 billion lower than at this time in 2022.

May’s original (first participation) production of $360 million was $38 million higher than April’s $322 million, and higher than that of May 2023, when approximately $352 million in original new HMBS pools were issued.

The 86 pools issued in May consisted of 22 first-participation or original pools, 63 tail pools, and 1 pool which included both new production and tails. 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. Last month’s tail pool issuances totaled $164 million, below the typical range.

Notable in the May HMBS issuance data are 22 pools with aggregate pool size less than $1 million. Issuers are taking advantage of Ginnie Mae’s provision to issue pools as small as $250,000. This represents $11.4 million of UPB that may not otherwise have been issued in May. Ginnie Mae issued APM 23-11 in September which allows participations from the same loan to be pooled more than once in the same month. The aggregate of participations pooled in May for which more than one participation from the same loan was pooled is $53 million, of which $3 million were first participations.

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 – April 2024

May 13th, 2024

The New View Advisors and Recursion April 2024 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 04_2024. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This 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 2024 Part II: Not so FAR away

May 9th, 2024

Total HMBS payoffs in April showed a slight increase over March; overall prepayment speeds increased to 17.9% per annum from February’s 17.6% per annum. Outstanding HMBS decreased to $58.4 billion.

As mentioned in previous blogs, Ginnie Mae took over RMF’s HMBS portfolio in December 2022. “Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 4,001 former RMF pools. About $334 million of Issuer 42’s portfolio paid off in April, but Issuer 42 still accounts for $17.20 billion, or about 29.4% of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 still has over $1 billion uncertificated position, that is, the excess of their portfolio’s HECM asset balance over the balance of their HMBS liability.

Finance of America is the issuer of record of $17.16 billion, also about 29.4% of all outstanding HMBS. With Issuer 42 not issuing tail pools, Finance of America will likely replace Ginnie Mae as the top Issuer in May.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, payoffs last month due to Mandatory Purchases occurred at a rate of 9.8% per annum compared to March’s 9.5% per annum.

Including the Mandatory Purchases, HMBS paid off at a 17.9% annual rate in April, and 17.3% over the last 12 months. Exclusive of Mandatory Purchases, the rate of HMBS payoffs over the past 12 months is well below the prior 12 months. Natural payoffs (those other than Mandatory Purchases) for the 12 month period ending April 30th were 7.4% per annum, compared to 10.3% for the prior 12 month period.

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

HECM Endorsement Analytics – April 2024

May 2nd, 2024

There were 2,105 HECM endorsements in April, up slightly from last month’s 2,058 unit count, and in keeping with the flatline trend evidenced over the past six months. Our full report can be found here: NV Endorsement 2024_04.

HUD’s March Endorsement Snapshot Report was just released on its website. Movement Mortgage, Atlantic Avenue Mortgage, and C2 Financial Corporation have been the most active wholesale originators during the last six months, while Longbridge and Finance of America Reverse remain the leading wholesale sponsors.

HMBS April 2024: Rates School April Fools

May 1st, 2024

The HMBS new issue market bounced back in April, with HECM Mortgage-Backed Securities (“HMBS”) issuance totaling $503 million, $56 million higher than March’s $447 million. 89 pools were issued in April and 79 in March. HMBS issuance remains near historical lows with April’s volume being the 10th lowest monthly tally since 2010.

FAR was the top issuer in April with $155 million – $15 million more than March’s $140 million. Issuance from Longbridge increased by $18 million to $107 million. PHH and Mutual of Omaha issued $95 million and $88 million respectively. Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.

HMBS issuance set a record in 2022, with nearly $14 billion issued. Total volume for 2023 was less than half that, with $6.5 billion issued. 2024 is off to an even slower start, with total issuance through April totaling just $1.8 billion – $182 million lower than at this time last year, and $3.9 billion lower than at this time in 2022.

April’s original (first participation) production of $322 million was $54 million higher than March’s $268 million, though lower than that of April 2023, when approximately $379 million in original new HMBS pools were issued.

The 89 pools issued in April consisted of 20 first-participation or original pools, 67 tail pools, and 2 pools which included both new production and tails. 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. Last month’s tail pool issuances totaled $180 million, below the typical range.

Notable in the April HMBS issuance data are 25 pools with aggregate pool size less than $1 million. Issuers are taking advantage of Ginnie Mae’s provision to issue pools as small as $250,000. This represents $13.6 million of UPB that may not otherwise have been issued in April. Ginnie Mae issued APM 23-11 in September which allows participations from the same loan to be pooled more than once in the same month. The aggregate of participations pooled in April for which more than one participation from the same loan was pooled is $63.1 million, of which $1.7 million were first participations.

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 2024

April 11th, 2024

The New View Advisors and Recursion March 2024 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 03_2024. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This 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 2024 Part II: Another Eclipse

April 10th, 2024

After four months of increasingly lower prepayments, total HMBS payoffs in March increased by over $100 million; overall prepayment speed increased to 17.7% per annum from February’s 15.7% per annum. Outstanding HMBS decreased to $58.6 billion.

Ginnie Mae Issuer 42 remains issuer of record for 4,006 former RMF pools. About $323 million of Issuer 42’s portfolio paid off in March, but Issuer 42 still accounts for $17.4 billion, or 29.8% of all outstanding HMBS. Issuer 42 has not issued any tail pools and now has well over a $1 billion uncertificated position, that is, the excess of the portfolio’s HECM asset balance over the balance of its HMBS liability.

Close behind, Finance of America Reverse is the issuer of record for $17.1 billion, or 29.2% of all outstanding HMBS. With Issuer 42 not issuing tail pools, expect FAR to eclipse Ginnie Mae in the second quarter as top Issuer.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, payoffs last month due to Mandatory Purchases occurred at a rate of 9.0% per annum compared to February’s 9.2% per annum.

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