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.

2021Q2 HMBS Issuer League Tables – “Top Five” Still Account for 94%

July 1st, 2021

AAG continued its #1 HMBS issuer dominance for the first six months of 2021 with $1.576 billion of issuance and 27% market share. FAR stayed firmly in second with $1.256 billion issued and 21.5% market share. RMF moved up a notch to third with $997 million issued and 17.1% market share, and Longbridge was fourth with $991 million issued and 17% market share. PHH Mortgage again rounded out the Top Five, with $667 million and a 11.4% market share. These five issuers accounted for more than 94% of all HMBS issuance in the quarter, consistent with past performance. There were 14 active HMBS issuers in the first half of 2021, one more than last year, with Mutual of Omaha returning to market and issuing two pools in Q1.

2021Q2 saw $3.16 billion of HMBS issued, up 18% from last quarter’s $2.68 billion and itself a quarterly record. Doubling first half production would put the industry annual total at a record $11.7 billion, though higher interest rates and refinance burnout may challenge volume in the later months of 2021.

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

HECM Endorsement Analytics – June 2021

July 1st, 2021

4,160 HECM loans were endorsed in June 2021, 4.4% lower than May’s 4,350. Endorsement count has been over the 4,000 mark seven consecutive months, something not seen since 2017. Origination volumes of larger lenders have been mostly steady over the past several months. Smaller lenders are experiencing more volatility. Money House originated 82 loans, 83% higher than its 12-month average, while TMAC originated just 3 loans, 91% lower than its 12-month average. Our report can be found here:  NV Endorsement 2021_06.

HUD’s May Endorsement Snapshot Report is now available on their website. H2H refis are now almost 45% of all endorsements. South River Mortgage continues to be a strong wholesale originator; it originated 126 loans sponsored by another party. It is the second consecutive month South River Mortgage leads in this category.

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 June 2021: School’s Out – Will Refis Take a Vacation?

July 1st, 2021

HMBS issuers posted another strong month in June 2021 with just over $1.0 billion in new issuance, as refinancing activity continued to be strong. 102 pools were issued in June, including 40 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

$10.6 billion in HMBS was issued in 2020, easily beating 2019’s total of $8.3 billion and 2018’s $9.6 billion. 2010 remains the all-time HMBS volume year with $10.8 billion issued, when Principal Limits were high and no borrower financial assessment safeguards had been established. That record may fall this year, as nearly $6 billion was issued in the first half, but it remains to be seen how long the refinancing boom can continue.

June’s production of original new loan pools was $823 million, compared to May’s $862 million, April’s record $900 million, March’s $671 million, February’s $693 million, January’s $552 million, December’s previous record of $878 million, and November’s $765 million. Approximately $593 million in original new loan pools were issued in June 2020.

June issuance divided into 53 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 and FHA mortgage insurance premiums. Last month’s tail pool issuances totaled $196 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 – May 2021

June 10th, 2021

New View Advisors and Recursion May 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 05_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.

HMBS May 2021 Part II: We’re An All-Time High

June 9th, 2021

Outstanding HMBS rose to a record $56.5 billion in May 2021, as payoffs and issuance remained high.  Payoffs and issuance totaled just over $1 billion; total outstanding HMBS rose by just over $120 million, the approximate amount of total negative amortization.  The big payoff reflects continued high levels of refinancing.

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.

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.  So far this year, HMBS new issuance already totals $4.8 billion, on pace to exceed $11 billion in 2021.

“Peak Buyout” was an echo of the peak issuance from 2009 through the first half of 2013.  Most 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 with lower interest rates loans take longer to roll up to their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”).  Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $199 million, falling below $200 million for the first time in nearly seven years.

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

 

 

HECM Endorsement Analytics – May 2021

June 1st, 2021

4,350 HECM loans were endorsed in May. Monthly endorsement count has remained above the 4,000 mark for six consecutive months, something not seen since the publication of Mortgagee Letter 2017-12. The Santa Ana Homeownership Center (HOC) saw the largest month-over-month endorsement increase of 5.6%; the other three HOCs each experienced month-over-month increases of more than 2.0%. Our report can be found here: NV Endorsement 2021_05.

HUD’s April Endorsement Snapshot Report is now available on their website. Despite interest rates creeping up in 2021, HECM for refinance continues to play a dominant role in endorsement activity; for the first time, refis crossed the 40% of endorsements threshold.

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 timelier than what endorsement analysis alone can show.

HMBS May 2021: May Flowers

June 1st, 2021

HMBS issuers posted another very strong month with just over $1.0 billion of issuance in May, the third month of the post-LIBOR era. February 2021 was the last month in which Ginnie Mae allowed pooling of new HMBS pools backed by first participations of LIBOR-based HECMs. The Constant Maturity Treasury “CMT” index is now the only index for new adjustable rate HECM loans and will remain so until a transition to another index, likely the Secured Overnight Financing Rate, or “SOFR.” 105 pools were issued in May, including 45 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

A record $10.6 billion in HMBS was issued in 2020, easily beating 2019’s total of $8.3 billion and 2018’s $9.6 billion. 2010 remains the all-time HMBS volume year with $10.8 billion issued, when Principal Limits were high and no borrower financial assessment safeguards had been established. With nearly $5 billion issued so far, that record may fall this year if interest rates stay low.

May’s production of original new loan pools was $862 million, compared to April’s 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 $586 million in original new loan pools were issued in May 2020.

May issuance divided into 57 first-participation or original pools, and 48 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. May’s tail pool issuances totaled $182 million, within the range of recent months.

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 – April 2021

May 12th, 2021

New View Advisors and Recursion April 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 04_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.