HECM Endorsement Analytics – October 2020

November 23rd, 2020

HUD’s October 2020 HECM Endorsement Summary Report totals 3,737 endorsements, dropping 5% from last month’s 3,937 tally. Nonetheless, endorsement count maintained its steady pace for the 5th month in a row.  Our analysis can be found here: NV Endorsement 2020_10.

Most of the top originators experienced a drop in endorsements in sync with the overall decline in volume; the number of loans endorsed by AAG, Fairway Independent Mortgage, and Open Mortgage each dropped 10+% compared to the prior month; however, Reverse Mortgage Funding and Mutual of Omaha Mortgage saw their endorsement count each gain by more than 7%.

HUD’s September Endorsement Snapshot Report is now posted on its website. Wholesale sponsors sponsored a total of 1,763 loans originated by another party. Nearly 90% of that total were sponsored by the top six sponsors. Finance of America Reverse continued to be the leading player in this category, sponsoring 535 loans. Notably, new entrant South River Mortgage originated 106 loans originated by another party. While just entering the space midyear, its volume has been up each month and has had endorsed 231 HECMs.

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 the WBWFW report are included at the end of our 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 October 2020 Part II: HMBS Supply Rises, For Now

November 10th, 2020

Outstanding HMBS rose by about $50 million in October, as payoffs rose and new issuance remained strong. Payoffs increased to $950 million, despite the continued fall of mandatory buyouts. Total outstanding HMBS rose to over $55.4 billion, the highest total in two years.

In 2019, HMBS posted its lowest annual total in five years. But 2020 is shaping up differently. In recent months, low interest rates and higher lending limits boosted production significantly. This trend will likely continue for the rest of 2020 as HMBS issuers rush to beat the year-end LIBOR deadline, after which no new first-participation LIBOR pools can be issued. Beginning in 2021, the industry may struggle to reach the same levels of production.

“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. Each month, fewer and fewer of these peak issuance loans remain, so fewer HECM loans reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”). Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $255 million, just above last month’s 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. With buyouts at one-third their peak level, Peak Buyout is long gone.

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

HMBS October 2020: HMBS Issuers Haunted by Ghost of LIBOR

November 2nd, 2020

HMBS issuance totaled $879 million in October, marking another banner month overshadowed by the pending demise of LIBOR as an HMBS index. December 2020 will be the last month in which Ginnie Mae allows pooling of new HMBS pools backed by first participations of LIBOR-based HECMs. 86 pools were issued in October.

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. Helped not only by historically low interest rates, but also lower default rates and the reemergence of proprietary loans, the reverse mortgage market is stronger than ever. However, this strength may soon be challenged by economic conditions and the transition out of LIBOR.

$8.5 billion in HMBS has been issued in 2020 through October, already beating last year’s total of $8.3 billion. HMBS Issuers are on track to exceed 2018’s $9.6 billion total, as a mad rush ensues to issue LIBOR HMBS before the clock runs out. 2017’s total issuance of $10.5 billion may be out of reach, but not by much.

October production of original new loan pools was about $674 million, compared to September’s $693 million, August’s $666 million, July’s $691 million, $593 million in June, $586 million in May, $470 million in April, $455 million in March, $501 million in February, and a mere $426 million in October 2019.

Last month’s tail pool issuances totaled $205 million, at the low end of the typical $200-$250 million range.

October issuance divided into 37 first-participation or original pools and 49 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 September 2020 Part II: HMBS Supply Rises, For Now

October 9th, 2020

Outstanding HMBS increased by $141 million in September, as payoffs rose and new issuance remained strong. Payoffs were just under $880 million, despite the continued fall of mandatory buyouts. Total outstanding HMBS rose to over $55.3 billion, the highest total in 23 months. Two months ago we asked: is this is the end of the HMBS range-bound equilibrium of the last year and a half, in which HMBS issuance and interest roll-up roughly equaled payoffs? For the time being, yes it is. For the past two months, HBMS issuance and payoffs have been roughly equal, so supply has increased approximately by the amount of interest roll-up.

In 2019, HMBS posted the lowest annual total in five years. But 2020 is shaping up differently. In recent months, low interest rates and a higher lending limit boosted production significantly, while mandatory buyouts continue to fall. This trend will likely continue for the rest of 2020 as HMBS issuers rush to beat the year-end LIBOR deadline, after which no new first-participation LIBOR pools may be issued. Beginning in 2021, the industry may struggle to reach the same levels of production.

“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. Each month fewer and fewer of these peak issuance loans remain, and so fewer HECM loans reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”). Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $253 million, yet 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. With buyouts at one-third their peak level, Peak Buyout is long gone.

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

HECM Endorsement Analytics – September 2020

October 5th, 2020

HUD’s September 2020 HECM Endorsement Summary Report totals 3,937 endorsements, a slight drop from last month’s 4,007 but still a pace not seen since FY2017. New View Advisors’ summary report can be found here: NV Endorsement 2020_09. Endorsements have been stable for the last four months, fluctuating by no more than 300 units a month.

Endorsements by region mirror the national dynamic; none of the home ownership centers or major field offices experienced any material change in volume. Among the top originators of note, Open Mortgage endorsed 236 loans, a 33% increase from August; Longbridge endorsed 167 loans, a 39% drop from August.

HUD’s August Endorsement Snapshot Report is now posted on its website. The Top-4 wholesale sponsors endorsed 1,109 loans originated by another party, a drop from last month’s 1,375 loans. Despite the drop, Longbridge’s wholesale increased 28% with 361 units compared to last month’s 281, and Open Mortgage increased its count 55% with 115 sponsorships compared to last month’s 74.

The August Snapshot Report also shows 1,120 endorsements labeled as HECM to HECM refis, 28% of total endorsements, nearly equal to the surge of refinancings from when FY2017 drew to a close three years ago. Ginnie Mae’s unexpected announcement last week ending LIBOR-indexed HMBS effective 2021 will likely alter the HECM to HECM refinance landscape, and impact HECM origination volume until a permanent replacement for LIBOR is established.

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.

2020Q3 HMBS Issuer League Tables – AAG Heading into the Stretch

October 2nd, 2020

AAG maintained its #1 HMBS issuer ranking through three quarters of 2020 with nearly $2 billion of issuance and 26.3% market share. Longbridge leapfrogged into second place for the quarter with $1.44 billion issued and 18.9% market share. RMF dropped to third, with $1.32 billion issued and 17.3% market share, and FAR was fourth with $1.31 billion issued and 17.3% market share. PHH Mortgage fell to fifth, with $886 million and 11.7% market share. These five issuers continue to account for 91% of all HMBS issuance. There were 12 active HMBS issuers in 2020Q3.

2020Q3 saw $3.16 billion of HMBS issued, up from second quarter’s $2.35 billion and first quarter’s $2.09 billion. With HMBS capital markets recovered from the Coronavirus pandemic, and HECM origination volume up, 2020 HMBS issuance is on trajectory for close to $10 billion. As mentioned in our previous blog, time will soon tell how Ginnie Mae’s decision to end LIBOR as an index for new HMBS pools backed by first participations will affect volume.

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

HMBS September 2020: Sorrow for the Lost LIBOR; Quoth Ginnie Mae: “Nevermore”

October 1st, 2020

HMBS issuance totaled $883 million in September 2020, marking another banner month, but overshadowed by Ginnie Mae’s announcement ending LIBOR as an index for new HMBS pools backed by first participations of HECM loans. Helped by a recovered capital market and low interest rates, HMBS issuers continued a streak of robust production. 79 pools were issued in September.

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. Helped not only by historically low interest rates, but also lower default rates and the reemergence of proprietary loans, the reverse mortgage market is stronger than ever. However, this strength may soon be challenged by economic conditions and the transition out of LIBOR.

So far, $7.6 billion in HMBS has been issued in 2020, on track to beat not only last year’s total of $8.3 billion for calendar year 2019, but possibly 2018’s $9.6 billion total, as a mad rush ensues to issue LIBOR HMBS before the clock runs out. Even 2017’s record total issuance of $10.5 billion is in reach with a few more months of strong production. Also, securitization of private reverse mortgages is a much bigger factor now. We estimate that the total issuance of reverse mortgage securities backed by new collateral in 2019 was about the same as 2018. Private reverse mortgage lenders who had suspended their program have resumed lending, and private label securitizations are being issued by multiple issuers.

September production of original new loan pools was about $693 million, compared to August’s $666 million, July’s $691 million, $593 million in June, $586 million in May, $470 million in April, $455 million in March, $501 million in February, and a mere $393 million in September 2019.

Last month’s tail pool issuances totaled $191 million, slightly below the typical $200-$250 million range.

September issuance divided into 35 first-participation or original pools and 44 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 August 2020 Part II: HMBS Supply Rises Again

September 10th, 2020

Outstanding HMBS rose by about $146 million in August, as payoffs fell and issuance continued strong. Payoffs totaled just under $860 million, as mandatory purchases continued to fall. Total outstanding HMBS rose to over $55.2 billion, the highest total in 21 months. Last month we asked: is this the end of the HMBS range-bound equilibrium of the last year and a half, in which HMBS issuance and interest roll-up roughly equaled payoffs? August’s results say yes, it is.

In 2019, HMBS posted the lowest annual total in five years. But 2020 is shaping up differently. In recent months, low interest rates and a higher lending limit boosted production significantly, while Mandatory Buyouts continue to fall. August was a case in point, with strong new loan production and Buyout dollar volume falling further.

“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. Each month fewer and fewer of these peak issuance loans remain, so fewer HECM loans reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”). Peak Buyout is long gone.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $271 million, yet 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.

HECM Endorsement Analytics – August 2020

September 2nd, 2020

HUD’s August 2020 HECM Endorsement Summary Report shows a fourth consecutive strong print month, with 4,007 endorsements, our summary report of which can be found here: NV Endorsement 2020_08. For May, June and July, monthly endorsement counts were 5,038, 4,209 and 4,256, respectively. For comparison, there were just 2,341 endorsements a year ago in August 2019.

All major originators had strong performance in August including AAG continuing its lead with 1/3 of all endorsements. Compared to a year ago, Longbridge and Open Mortgage both increased endorsement originations by approximately 50%, each moving from approximately 2% to 3% market share.

HUD’s July Endorsement Snapshot Report is also now posted on its website. Fairway remains the commanding leader, originating 1,572 loans sponsored by another party over the last 12 months, followed by Ennkar, Finance of America, All Reverse Mortgage and Advisors Mortgage, each originating more than 400 such loans during the period. FAR sponsored 4,730 loans originated by another party during the last 12 months, followed by Liberty, RMF and AAG. Each sponsored more than 2,000 such loans over the course of the year.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of this endorsement report subscription. Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. The dataset is more complete and timely than what endorsement analysis alone can show.

HMBS August 2020: Summer of Love for New Issuance

September 1st, 2020

HMBS issuance totaled $859 million in August 2020, marking another banner month. Helped by a recovered capital market and low interest rates, HMBS issuers continued a streak of robust production. 80 pools were issued in August.

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. Helped not only by historically low interest rates, but also lower default rates and the reemergence of proprietary loans, the reverse mortgage market is stronger than ever. However, this strength may soon be challenged by economic conditions and the transition out of LIBOR.

So far, $6.7 billion in HMBS has been issued in 2020, on track to beat not only last year’s total of $8.3 billion for calendar year 2019, but probably 2018’s $9.6 billion total. Even 2017’s total issuance of $10.5 billion is in reach with a few more months of strong production. Also, securitization of private reverse mortgages is a much bigger factor in overall origination volume. We estimate the total issuance of reverse mortgage securities backed by new collateral in 2019 was about the same as 2018. Private reverse mortgage lenders that suspended programs have resumed lending, and private label securitizations are being placed by multiple issuers.

August production of original new loan pools was about $666 million, down slightly from July’s $691 million, but nonetheless impressive compared to $593 million in June, $586 million in May, $470 million in April, $455 million in March, $501 million in February, and a mere $390 million in August 2019.

Last month’s tail pool issuances totaled $193 million, again below the typical $200-$250 million range.

August issuance divided into 34 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.