New View Advisors and Recursion Reverse Mortgage Prepayment Indices – December 2021

January 11th, 2022

New View Advisors and Recursion December 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 12_2021. 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.

For HMBS pools backed by adjustable rate HECMs using the Constant Maturity Treasury (CMT) index, prepayment speeds will continue to populate as more of these HMBS are issued.

HMBS December 2021 Part II: Refinancing Is the Holiday Guest That Won’t Leave

January 11th, 2022

Outstanding HMBS rose to an all-time high of $57.1 billion in December 2021 as record issuance outweighed another big, refinance-driven month of payoffs.

Meanwhile, extraordinary levels of both issuance and HECM loan payoffs continued. Fueled by refinancing, HMBS payoffs exceeded $1 billion for the tenth month in a row. Outstanding HMBS rose $310 million despite these near-record payoffs. As we predicted, December’s data is a disappointment for HMBS investors hoping for a prepayment slowdown. While falling short of November’s record payoffs, December came close in both dollar amount and speed: $1.28 billion, representing a 24% annual payoff rate. Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases were just $218 million, less than 18% of the total for the first time ever. Will rising interest rates finally allow investors to show their unwanted guest the door? For now, refis seem determined to stay through the New Year’s Eve party.

As we noted last week, American Advisors Group sold most of its HMBS issuance portfolio to Reverse Mortgage Funding, and Mr. Cooper Group sold its HMBS portfolio to Mortgage Assets Management, LLC (MAM). The resulting consolidation leaves the top five issuers accounting for more than 93% of all outstanding HMBS.

According to Ginnie Mae data, AAG was listed in October as the issuer of record for 1,529 HMBS pools totaling $13.1 billion. At yearend, AAG is listed for just 55 pools totaling $1.6 billion. Reverse Mortgage Funding is now the issuer of record for over 3,800 pools totaling $23.5 billion, more than 41% of all outstanding HMBS. The December month end Ginnie Mae data release reflects the Mr. Cooper/MAM sale, removing Mr. Cooper from the HMBS issuance ranks.

In these strategic transactions, the purchasing issuer pays the selling issuer the present value of the issuer’s uncertificated position, which is the difference between future HECM cash flow and future HMBS cash flow. The buyer becomes the issuer for the purchased HMBS pools, benefiting from the excess spread between the HECM interest rate and the HMBS pass-through rate, and any premiums from future tail issuance. Of course, the buyer also assumes the liabilities of an HMBS issuer: advancing Mortgage Insurance Premium (MIP), borrower draws, realized losses from claims, and many others.

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

HECM Endorsement Analytics – December 2021

January 7th, 2022

December finished with a record monthly HECM endorsement count for 2021 of 5,218 loans, bringing the total annual endorsement count to 53,020 units, exceeding by 18.7% the 44,661 HECMs endorsed in 2020. AAG, RMF and FAR accounted for 52.3% of all HECMs endorsed in 2021, slightly higher than the 50.7% seen in 2020. Our report can be found here: NV Endorsement 2021_12.

HUD’s November Endorsement Snapshot Report was just released on its website. “HECM for Refinance” remains at more than 50% of all HECMs endorsed in the month.

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.

2021 Full Year HMBS Issuer League Tables – Portfolio Sale Upends the Rankings

January 4th, 2022

Reverse Mortgage Funding became the #1 HMBS issuer in 2021, with $4.09 billion issued and near 31% market share, due in part to its acquisition of AAG’s HMBS portfolio during the quarter. Ginnie Mae gives full issuance credit to the surviving/purchasing HMBS Issuer. FAR remained in second with $2.83 billion issued and 21.4% market share, Longbridge was third with $2.18 billion issued and 16.5% market share, and PHH was fourth with $1.67 billion issued and 12.7% market share. AAG fell to fifth, rounding out the Top Five, with $1.64 billion and a 12.4% market share. Giving credit to AAG for its full-year book of business, AAG annual issuance volume would have been approximately $4.23 billion.

Once again, these same five issuers accounted for 94% of all HMBS issuance, consistent with past performance. There were 14 active HMBS issuers in 2021, though Nationstar and The Money House did not issue in the fourth quarter. Expect Nationstar to drop from the League Tables in 2022 as they exited the business in December.

2021Q4 saw $3.91 billion of HMBS issued, up 13% from last quarter’s $3.45 billion and the fourth consecutive quarterly issuance record. As mentioned in many of our previous blogs, $13.19 billion of HMBS issuance in 2021 easily surpassed 2010’s previous record $10.8 billion, a time when Principal Limits were high and Financial Assessment non-existent.

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

HMBS December 2021: Issuers Close Books on Record Breaking Year

January 3rd, 2022

HMBS issuers rewrote the records books again in December. Nearly $1.5 billion in new HMBS was issued, finishing a record year and setting a record for new original loan pools for the third month in row. Refinancing activity continued to be strong. 123 pools were issued in December, including 54 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

HMBS issuance totaled $13.2 billion for 2021, an all-time record, easily surpassing 2010, the previous HMBS record year with $10.8 billion issued.

December’s production of original new loan pools was a record $1.14 billion, edging out November’s $1.08 billion and October’s $1.07 billion. Approximately $878 million in original new loan pools were issued in December 2020.

December issuance divided into 67 first-participation or original pools, and 56 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 $335 million, well above the typical range.

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

HECM Endorsement Analytics – November 2021

December 13th, 2021

HECM endorsements dropped slightly in November to 4,953 loans, bringing the total year-to-date endorsement count to 47,802 loans, exceeding the 44,661 loans endorsed during all of 2020. Our report can be found here: NV Endorsement 2021_11. There are no notable changes in the rankings of top lenders.

HUD’s October Endorsement Snapshot Report was just released on its website. Ennkar was the most active wholesale originator, endorsing 133 loans sponsored by another company, followed by South River Mortgage and Fairway Independent Mortgage with 127 and 108 loans, respectively. After dropping slightly over the last two months, refinancings once again accounted for more than half of all endorsements. There is no sign of weakening in refinancing activity, and it will only be fueled further by next year’s Maximum Claim Amount, an astonishing $970,800.

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.

New View Advisors and Recursion Reverse Mortgage Prepayment Indices – November 2021

December 9th, 2021

New View Advisors and Recursion November 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 11_2021. 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.

For HMBS pools backed by adjustable rate HECMs using the Constant Maturity Treasury (CMT) index, prepayment speeds will continue to populate as more of these HMBS are issued.

HMBS November 2021 Part II: Santa Comes Early With Sack Full of Deals … and Refi Naughty List

December 9th, 2021

Outstanding HMBS remained near its all-time high of $56.8 billion in November 2021 as a slew of big issuer transactions shuffled the deck, with AAG selling nearly all its HMBS issuer portfolio to Reverse Mortgage Funding and Mr. Cooper Group selling its HMBS portfolio, along with its reverse mortgage assets, to Mortgage Assets Management, LLC (“MAM”).

Meanwhile, very high levels of both issuance and HECM loan payoffs continued. Driven by extraordinary levels of refinancing, HMBS payoffs exceeded $1 billion for the ninth month in a row. Outstanding HMBS fell by $30 million, despite record new issuance. Any HMBS investor hoping for a cooling off of prepayments will be disappointed by November’s data. After receiving a bag of rocks for Halloween in October, and the turkey that was November, expect a stocking full of coal in December. October’s payoffs totaled $1.2 billion for a 23% CPR (Conditional Prepayment Rate, or annual rate of payoffs), but November’s payoffs set a new record for both amount and speed: over $1.3 billion, for a blistering 25% CPR.

According to Ginnie Mae data, AAG was listed as the issuer of record for 1,529 HMBS pools totaling $13.1 billion as of October month-end. As of November month-end, AAG is listed as the issuer of record for 46 pools totaling $1.4 billion. Reverse Mortgage Funding is now the issuer of record for nearly 3,800 pools totaling over $23.6 billion, almost 42% of all outstanding HMBS. The November month-end Ginnie Mae data release does not yet reflect the MAM/Mr. Cooper transaction. Mr. Cooper is still shown as issuer of record for over 2,000 HMBS pools totaling more than $4.3 billion.

In these strategic transactions, the purchasing issuer pays the selling issuer the present value of the issuer’s uncertificated position, which is the difference between future HECM cash flow and future HMBS cash flow. The buyer becomes the issuer for the purchased HMBS pools, therefore benefits from the excess spread of the HECM interest rate over the HMBS pass-through rate, and also receives premiums from future tail issuance. Of course, the buyer also assumes the many liabilities of an HMBS issuer: advancing Mortgage Insurance Premium (“MIP”), borrower draws, realized losses from claims, and many others.

In 2019, HMBS posted its lowest annual issuance total in five years. But in 2020 low interest rates and a higher lending limit boosted production significantly to a near-record $10.6 billion. In the first eleven months of 2021, HMBS new issuance already exceeds $11.7 billion, a new record.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $255 million, less than 19% of the total for the first time ever.

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

HMBS November 2021: Issuers Give Thanks for Record-Smashing Month

December 1st, 2021

HMBS issuers rewrote the records books in November, posting yet another $1.2 billion month and setting new HMBS records for both total annual issuance and monthly original loan pools. Refinancing activity continued to be strong. 96 pools were issued in November, including 52 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

With November’s activity, HMBS issuance now stands at $11.7 billion for 2021, an all-time record. The previous all-time HMBS annual volume year was 2010, with $10.8 billion issued.

November’s production of original new loan pools was a record $1.08 billion, edging out October’s previous record $1.07 billion. Approximately $765 million in original new loan pools were issued in November 2020.

November issuance divided into 63 first-participation or original pools, and 33 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 $148 million, below the typical range.

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

HECM Endorsement Analytics – October 2021

November 16th, 2021

October saw 5,029 HECM loans endorsed, the highest unit count since May 2020. As is the case with 2021 HMBS dollar volume, by mid-November, i.e. now, total endorsement count will exceed what was printed for all of calendar 2020. Our report can be found here: NV Endorsement 2021_10. Every top lender increased endorsements from the previous month; in particular, PHH more than doubled its endorsement count again reaching 615 loans, by far its highest monthly endorsement tally in history.

HUD’s September Endorsement Snapshot Report was released on its website today. There was no material change from last month. South River Mortgage posted another strong month in wholesale, with 108 endorsements. Over the last six months, SRM has overtaken Fairway Independent Mortgage to become the leader in this group.

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.