Archive for the ‘HMBS’ Category

HMBS August 2019: Issuance Does Not Take a Vacation

Tuesday, September 3rd, 2019

HMBS issuance totaled $637 million in August, as lower rates strengthened new production. 93 pools were issued in August, including about $390 million of new unseasoned HECM first participation pools, the highest monthly total for new production this year. There were no highly seasoned pools issued.

Reverse mortgage lenders face a new era of reduced volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of Fiscal Year 2018. For the 2018 calendar year, HMBS issuance totaled about $9.6 billion, compared to $10.5 billion in 2017. Even with this month’s issuance, the HMBS market will be hard pressed to equal last year’s totals. HMBS issuers sold 110 pools totaling $580 million in August 2018.

August’s production of original new loan pools was about $390 million, compared to $321 million in July, $331 million in June, $325 million in May, $300 million in April, $277 million in March, $274 in February, and $304 million in January. Last month’s tail pool issuances totaled $243 million, on the high end of the range of recent tail issuance. As predicted last month, we are seeing the benefit of lower interest rates helping new origination volume.

August 2019 issuance divided into 32 First-Participation or Original pools and 61 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 can generate profits for years, helping HMBS issuers during challenging times.

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

HMBS July 2019 Part II: HMBS Float Rises

Friday, August 9th, 2019

Outstanding HMBS rose by nearly $300 million in July, helped by a large new pool backed by highly seasoned Home Equity Conversion Mortgages (“HECMs”). Payoffs once again totaled just under $1 billion. Total outstanding HMBS rose to just under $54.5 billion. Without that one pool, HMBS float would have fallen below $54 billion for the first time in over 3 years.

Total HMBS float will likely finally fall further given current trends. HMBS issuance in the first half of 2019 was the lowest half of issuance in five years.

We also predict continuing declines in Mandatory Buyouts in the foreseeable future. “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 or repaid by borrowers. From now on, billion-dollar-plus payoff months will be the exception rather than the rule. Many HECM loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout appears to have ended.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases accounted for $610 million, or about 61%, of the payoffs last month. This continues a gradual downward trend from the buyout peak in last year’s third quarter, 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.

HMBS July 2019: It’s the Time of the Seasoned; Live Well’s Not There

Thursday, August 1st, 2019

HMBS issuance rose in July 2019 to over $1 billion, helped by a large highly seasoned pool. 83 pools were issued in July, including about $321 million of new unseasoned HECM first participation pools, the third highest monthly total for new production this year. Half of this month’s total issuance, the largest in 15 months, was from one large highly seasoned CMT pool.

Reverse mortgage lenders face a new era of reduced volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of Fiscal Year 2018. For the entire year of 2018, HMBS issuance totaled about $9.6 billion, compared to $10.5 billion in 2017. Even with this month’s issuance, the HMBS market will be hard pressed to equal last year’s totals, which included some HMBS issuance backed by new HECM loans originated at higher PLFs. HMBS issuers sold 100 pools totaling $545 million in July 2018.

Live Well is no longer the issuer of record for any Ginnie Mae HMBS pools. According to the Ginnie Mae data, RMF acquired the rights to the Live Well pools issued from December 2018 through June 2019. These pools totaled just under $200 million in unpaid balance as of last month. Late last year, RMF acquired over $4 billion in issuer rights, consisting of all outstanding HMBS pools issued by Live Well through November 2018. Pool BN4497 has the distinction of being the last pool issued by Live Well.

July’s production of original new loan pools was about $321 million, compared to $331 million in June, $325 million in May, $300 million in April, $277 million in March, $274 in February, and $304 million in January. Last month’s tail pool issuances totaled $222 million, within the range of recent tail issuance. With rates trending lower, we may be seeing the benefit of lower interest rates helping new origination volume.

July 2019 issuance divided into 28 First-Participation or Original pools and 55 tail pools, exactly the same totals as June. 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 can generate profits for years, helping HMBS issuers during challenging times.

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

2019Q2 HMBS Issuer League Tables – Very Little Change

Monday, July 1st, 2019

AAG retains its lead HMBS issuer slot for the second quarter of 2019, with $847.4 million of issuance for a 23.3% market share. RMF stayed in second, with $651.7 million issued and 17.9% market share, and FAR held third with $553.8 million issued and 15.19% market share. Longbridge jumped two spots to #4 with $552.2 million and 15.15% market share, and PHH Mortgage Corp, fka Ocwen Loan Servicing, fka Liberty Home Equity Solutions, placed fifth with $425.1 million for a 11.7% market share. These five issuers accounted for more than 83% of all issuance, up 4% from 2019Q1’s 79%. There were 14 active HMBS issuers during the quarter. One-time issuer Synergy One Lending did not issue securities in the quarter.

2019Q2 saw $1.98 billion of HMBS issued, up from 2019Q1’s $1.67 billion, but for the half, industry volume is off 36% from a year ago. Total HMBS issuance in the first six months of 2018 was $5.71 billion. Even with highly seasoned pool issuance, expect lower HMBS issuance volume going forward.

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

HMBS June 2019: Is First Half Glass Empty or Will Second Half Be Glass Full

Monday, July 1st, 2019

HMBS issuance fell in June 2019 to just over $561 million, ending the slowest half-year of issuance in five years, though yet another uptick in new production gave hope for the second half. No highly seasoned pools were issued. 83 pools were issued in June, including about $331 million of new unseasoned HECM first participation pools. HMBS float will almost certainly fall if June’s payoffs are in line with recent months.

Reverse mortgage lenders face a new era of reduced volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of Fiscal Year 2018. For the entire year of 2018, HMBS issuance totaled about $9.6 billion, compared to $10.5 billion in 2017. With total issuance at only $3.6 billion at the half-year mark, the HMBS market will be hard pressed to equal last year’s totals, which included some HMBS issuance backed by new HECM loans originated at higher PLFs. For comparison, HMBS issuers sold 116 pools totaling $964 million in June 2018.

Live Well Financial issued 1 HMBS pool in June totaling about $1.3 million. LiveWell recently ceased originating new loans.

June’s production of original new loan pools was about $331 million, compared to $325 million in May, $300 million in April, $277 million in March, $274 in February, and $304 million in January. Last month’s tail pool issuances totaled $230 million, within the range of recent tail issuance. After several months of Groundhog Day mode, with very similar volume statistics, we may be seeing the benefit of lower interest rates helping new origination volume.

June 2019 issuance divided into 28 First-Participation or Original pools and 55 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 can generate profits for years, helping HMBS issuers during challenging times.

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

HMBS: In the Month of May, “Gotta Find Me a Future, Move Out of My Way”

Monday, June 3rd, 2019

The future of reverse mortgage capital markets provided the theme of last month’s NRMLA Investors Conference in New York. In the month of May, HMBS issuers provided a glimpse of the future, with the first HMBS platinum pools, continued stagnation in the original pool market, and more highly seasoned issuance from the melting iceberg of (very) old whole loans.

HMBS issuance rose in May 2019 to just over $855 million. If not for three highly seasoned pools that bumped up issuance volume by over $282 million, May issuance would have been consistent with the low issuance of recent months. 94 pools were issued in May, including about $325 million of new unseasoned HECM first participation pools. HMBS float shrinkage will probably hold steady at about $54.5 billion if May’s payoffs are in line with recent months.

Ginnie Mae launched its HMBS Platinum Program on April 10th. Market participants can now aggregate Ginnie Mae II HMBS pools into Platinum pools. Like the underlying HMBS, these new pools will be segregated based on collateral type. As of today, no HMBS Platinum pool has been issued.

Live Well Financial issued 6 HMBS pools in May totaling about $23 million. Live Well recently ceased originating new loans.

Reverse mortgage lenders face a new era of reduced volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of Fiscal Year 2018. For the calendar year of 2018, HMBS issuance totaled about $9.6 billion, compared to $10.5 billion in 2017. The HMBS market will be hard pressed to equal last year’s totals, which included some HMBS issuance backed by new HECM loans originated at higher PLFs. For comparison, HMBS issuers sold 113 pools totaling $579 million in May 2018.

Production of original new loan pools was about $325 million in May, compared to $300 million in April, $277 million in March, $274 in February, and $304 million in January. Last month’s tail pool issuances totaled $247 million, within the range of recent tail issuance. For the past few months, the new issuance market has settled into Groundhog Day mode, with very similar volume statistics other than the occasional seasoned first participation issue.

May 2019 issuance divided into 36 First-Participation or Original pools, and 58 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 can generate profits for years, helping HMBS issuers during challenging times.

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

April 2019 Part II: March Backwards continues in April – Payoffs Drive Down HMBS Float

Thursday, May 9th, 2019

HMBS float fell again in April as a big payoff total continued to outweigh issuance. With over $985 million in payoffs and a continued drought of new issuance, total outstanding HMBS ended the month just over $54.3 billion, down over $2 billion from its peak a year ago. HMBS float had been range-bound between just under $55 billion to $57 billion for over two years. The current float is the lowest since July 2016.

Total HMBS float will likely finally fall further given current trends. As we noted earlier this week, HMBS issuance was just under $567 million in April, with a few highly seasoned new issues.

We predict continuing declines in Mandatory Buyouts in the foreseeable future. “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 or repaid by borrowers. Although April came close, billion-dollar-plus payoff months will be the exception rather than the rule. Many loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout appears to have ended.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases accounted for $627 million, or about 63%, of the payoffs last month. This continues a gradual downward trend from the buyout peak in last year’s third quarter, 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.

HMBS April 2019: Silent Spring

Tuesday, May 7th, 2019

HMBS issuance held steady in April 2019 at just over $567 million.  April issuance was consistent with the sharply lower issuance of recent months, despite a few highly seasoned pools that bumped up issuance volume.  86 pools were issued in April, including about $300 million of new first participation pools. For comparison, HMBS issuers sold 120 pools totaling $1.2 billion in April 2018.  HMBS float shrinkage will continue as April’s payoffs are almost certain to outweigh new issuance and interest roll-up.

Live Well Financial issued 9 HMBS pools in April totaling about $32 million. Since selling off its HMBS book to RMF last year, Live Well has issued over $160 million in HMBS pools.

Reverse mortgage lenders face a new era of reduced volume, primarily due to the lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of FY2018.  For calendar year 2018, HMBS issuance totaled $9.6 billion, compared to $10.5 billion in 2017.  The HMBS market will be hard pressed to equal last year’s totals, which included some HMBS issuance backed by new HECM loans originated at higher PLFs.

For 2019, the new issuance market has settled into Groundhog Day mode, with very similar volume statistics other than the occasional seasoned first participation issue: $300 million in April, $277 million in March, $274 in February, and $304 million in January.  April’s tail pool issuances totaled $221 million, within the range of recent tail issuance.

April 2019 issuance divided into 36 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 can generate profits for years, helping HMBS issuers during challenging times.

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

HMBS March 2019 Part II: March Backwards – Big Payoffs Drive Down HMBS Float

Tuesday, April 9th, 2019

HMBS float fell again in March as a big payoff total continued to outweigh issuance. With over $950 million in payoffs and a continued drought of new issuance, total outstanding HMBS ended the month just under $54.6 billion, down about $200 million from February. HMBS float had been range-bound between just under $55 billion to $57 billion for over two years. The current float is the lowest since August 2016.

Total HMBS float will likely fall further given current trends. As we noted last week, HMBS issuance was only about $557 million in March, with one highly seasoned new issue.

We predict continuing declines in Mandatory Buyouts in the foreseeable future. “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 or repaid by borrowers. Although March came close, billion-dollar-plus payoff months will be the exception rather than the rule. Many loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout appears to have ended.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases accounted for $616 million, or about 63%, of the payoffs last month. This continues a gradual downward trend from the buyout peak in last year’s third quarter, which averaged over $750 million in Mandatory Purchases per month.

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

2019Q1 HMBS Issuer League Tables – Look Who’s Back

Monday, April 8th, 2019

After a full year away from #1, AAG recaptured the lead HMBS issuer slot for the first quarter of 2019, with $391 million of issuance for a 23.5% market share.  RMF was second, with $323.5 million issued and 19.5% market share, and FAR remained in third with $244 million issued and 14.7% market share.  Ocwen Loan Servicing and Nationstar round out the top five issuers.  Ocwen issued $210.6 million for a 12.7% market share, and Nationstar was fifth with $142.7 million and 8.6% market share.  These five issuers accounted for approximately 79% of all issuance, down from 2018’s record 92%. There were 15 active HMBS issuers during the quarter, including first-time issuer Synergy One Lending, now owned by Mutual of Omaha.

2019Q1 saw only $1.67 billion of HMBS issued, a 44% decline from one year ago, and an almost five-year quarterly low.  For comparison, total HMBS issuance volume in the first quarter of 2018 equaled $2.97 billion.  As previously noted, unless highly seasoned pool issuance makes a meaningful and lasting return, expect lower HMBS issuance volume going forward.

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