HMBS November 2016: Give Thanks for Tail Issuance

HMBS issuers created 108 pools in November, down from October due to the lack of seasoned pool issuance. Production of original new loan pools was $504 million, up from October’s $487 million and generally in line with previous months this year. Issuance totaled approximately $718 million in November, the 4th lowest monthly dollar volume this year, down from October’s total of $832 million. The pools divided into 53 original pools and 55 tail pools.

Original pools are those HMBS pools backed by the first participation in a previously uncertificated HECM loan. Tail HMBS issuances are HMBS pools consisting of subsequent participations. In other words, tail pools are created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance. October’s tail issuance was about $214 million, the third highest monthly total this year.

Total outstanding HMBS ticked up to just over $55 billion, an increase of only $44 million from October. We estimate that November HMBS was composed of approximately $171 million in negative amortization, plus the $718 million in new issuance, minus about $845 million in payoffs. Payoffs have exceeded new issuance in 5 of the last 6 months. Payoffs figure continue to climb as more seasoned HECM loans liquidate or reach 98% of their Maximum Claim Amount.

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

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