Seasoned Loans Drive HMBS Issuance in February 2016

HMBS issuers created approximately $769 million in new HMBS pools during February, driven by nearly $175 million in new pools with very seasoned HECM loan collateral, as well as strong tail issuance totaling about $176 million. Last month’s HMBS issuance total exceeds both January 2016’s $651 million and February 2015’s $635 million. 97 pools were issued, consisting of 52 original issuances and 45 tail pools. Without the seasoned loan pools, HMBS issuance would have been a lackluster $593 million.

FHA’s new Financial Assessment requirements for newly originated HECM loans are the main driver for the reduced loan volume, which has reduced monthly HMBS issuance from $874 million in May 2015.

Total outstanding HMBS is about $53.8 billion, up from just under $53.5 billion at the end of January. We estimate that this increase is composed of approximately $167 million in negative amortization, plus the $769 million in new issuance, minus about $661 million in payoffs.

Original HMBS pools are created when a pool of FHA-insured Home Equity Conversion Mortgages (“HECMs”) is securitized for the first time. Tail HMBS issuances are HMBS pools created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance. Tail Issuances accounted for about 23% of February’s total. Newly originated loans comprise a large majority of HMBS issuance in any given month. As a result, HMBS issuance is a pretty good barometer of recent HECM production.

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

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