HMBS August 2021 Part II: Big Summer Continues

September 13th, 2021

Outstanding HMBS rose to a record $56.6 billion in August 2021, as high levels of both issuance and HECM loan payoffs continued. HMBS payoffs once again exceeded $1 billion. Outstanding HMBS rose by about $37 million. These big numbers reflect continued high levels of refinancing, as low rates and high home prices allow more senior homeowners to borrow new, larger HECM loans.

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. After eight months in 2021, HMBS new issuance already exceeds $8 billion.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $213 million, only 18.7% of the total.

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

HECM Endorsement Analytics – August 2021

September 13th, 2021

3,679 HECM loans were endorsed in August, a 14.3% drop from July and the first month below 4,000 units since November 2020. Our summary report can be found here: NV Endorsement 2021_08.  Most of the top originators had significantly fewer endorsements, notably AAG with 1,194 and RMF with just 427, 22.8% and 26.6% declines from July, respectively.

HUD’s July Endorsement Snapshot Report is now available on its website. HECM refi volume hit another milestone, exceeding 50% of all endorsements for the first time. Next month’s data will show if the August endorsement drop was driven by less refinance activity. Refinance burnout could have a material impact on overall endorsement volume.

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 – August 2021

September 10th, 2021

New View Advisors and Recursion August 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 08_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 August 2021: Endless Summer of Big Issuance

September 1st, 2021

HMBS issuers posted strong totals in August, with issuance volume strikingly similar to July. There was just under $1.1 billion in new HMBS, as refinancing activity continued to be strong. 107 pools were issued in August, including 42 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

The all-time HMBS annual volume year is 2010 with $10.8 billion issued, when Principal Limits were high and no borrower financial assessment safeguards had been established. That record will likely fall in 2021, as over $8 billion has been issued in the first eight months.

August’s production of original new loan pools was $880 million, compared to July’s record $937 million, June’s $823 million, May’s $862 million, April’s $900 million, March’s $671 million, February’s $693 million, January’s $552 million, and December’s $878 million. Approximately $666 million in original new loan pools were issued in August 2020, and only $390 million in August 2019.

August issuance divided into 57 first-participation or original pools, and 50 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 $210 million, within the typical range.

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 – July 2021

August 11th, 2021

New View Advisors and Recursion July 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 07_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 July 2021 Part II: Summer of Big Numbers Continues

August 10th, 2021

Outstanding HMBS rose to a record $56.6 billion in July 2021, as high levels of both issuance and HECM loan payoffs continued. HMBS payoffs once again exceeded $1.1 billion. Outstanding HMBS rose by about $90 million. These big numbers reflect continued high levels of refinancing, as low rates and high home prices allow more homeowners to borrow new, larger HECM loans.

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. After seven months, HMBS new issuance already totals almost $7 billion, on pace to exceed $11 billion in 2021.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $222 million, only 19.6% of total payoffs.

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

HECM Endorsement Analytics – July 2021

August 7th, 2021

HECM endorsement activity has been steady over the past 14 months. In July, 4,293 HECM loans were endorsed. AAG, RMF, and FAR, who originated 1,547, 582, and 333 loans respectively, continue to lead our top originators table and account for 53.5% of total endorsement volume. Our report can be found here: NV Endorsement 2021_07.

HUD’s June Endorsement Snapshot Report is now available on HUD’s website. Refis reached almost 49% of all endorsements, for the first time exceeding the number of traditional HECMs endorsed in a given 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.

HMBS July 2021: Long Hot Summer

August 2nd, 2021

HMBS issuers posted another strong month in July with just over $1.1 billion in new issuance, as refinancing activity continued to be strong.  106 pools were issued in July, including 43 first-participation CMT pools.  Before January 2021 no new first-participation CMT pools had been issued for many years.

The all-time HMBS annual volume year is 2010, with $10.8 billion issued.  That was when Principal Limits were high and no borrower financial assessment safeguards had been established.  That record may fall this year, as over $7 billion was issued in the first seven months, but it remains to be seen how long the refinancing boom can continue.

July’s production of original new loan pools was a record $937 million, compared to June’s $823 million, May’s $862 million, April’s previous record $900 million, March’s $671 million, February’s $693 million, January’s $552 million, December’s $878 million, and November’s $765 million.  Approximately $691 million in original new loan pools were issued in July 2020.

July issuance divided into 53 first-participation or original pools, and 53 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 $203 million, within the typical range.

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

HMBS June 2021 Part II: Refi Wave Rolls On

July 16th, 2021

Outstanding HMBS fell to just under $56.5 billion in June, as record HECM loan payoffs outpaced issuance. HMBS payoffs exceeded $1.1 billion, a dollar amount surpassed only by the assignment wave of 2018. For voluntary payments, including refinancings, June 2021 was a record month. Outstanding HMBS fell by about $50 million. The big payoff reflects continued high levels of refinancing, as low rates and high home prices allow more homeowners to borrow new, larger HECM loans.

February was the last month in which GNMA allowed issuance of HMBS pools backed by first participations of LIBOR-indexed loans. For the time being, the Treasury CMT index replaces LIBOR as the base index for newly originated adjustable-rate HECM loans.

For 2019, HMBS posted its lowest annual issuance total in five years. In 2020, low interest rates and a higher lending limit boosted production significantly to a near-record $10.6 billion. At the halfway mark in 2021, HMBS issuance totals $5.8 billion, on pace to exceed $11 billion.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $220 million, just 19.1% of the total.

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 – June 2021

July 12th, 2021

New View Advisors and Recursion June 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 06_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.

Please contact us if you’re interested in customized stratification of HECM prepayment speeds by vintage, Expected Rate, Weighted Average Loan Age, or other tailored output.