Archive for the ‘HMBS’ Category

New View Advisors and Recursion Reverse Mortgage Prepayment Indices – December 2021

Tuesday, January 11th, 2022

New View Advisors and Recursion December 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 12_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 December 2021 Part II: Refinancing Is the Holiday Guest That Won’t Leave

Tuesday, January 11th, 2022

Outstanding HMBS rose to an all-time high of $57.1 billion in December 2021 as record issuance outweighed another big, refinance-driven month of payoffs.

Meanwhile, extraordinary levels of both issuance and HECM loan payoffs continued. Fueled by refinancing, HMBS payoffs exceeded $1 billion for the tenth month in a row. Outstanding HMBS rose $310 million despite these near-record payoffs. As we predicted, December’s data is a disappointment for HMBS investors hoping for a prepayment slowdown. While falling short of November’s record payoffs, December came close in both dollar amount and speed: $1.28 billion, representing a 24% annual payoff rate. Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases were just $218 million, less than 18% of the total for the first time ever. Will rising interest rates finally allow investors to show their unwanted guest the door? For now, refis seem determined to stay through the New Year’s Eve party.

As we noted last week, American Advisors Group sold most of its HMBS issuance portfolio to Reverse Mortgage Funding, and Mr. Cooper Group sold its HMBS portfolio to Mortgage Assets Management, LLC (MAM). The resulting consolidation leaves the top five issuers accounting for more than 93% of all outstanding HMBS.

According to Ginnie Mae data, AAG was listed in October as the issuer of record for 1,529 HMBS pools totaling $13.1 billion. At yearend, AAG is listed for just 55 pools totaling $1.6 billion. Reverse Mortgage Funding is now the issuer of record for over 3,800 pools totaling $23.5 billion, more than 41% of all outstanding HMBS. The December month end Ginnie Mae data release reflects the Mr. Cooper/MAM sale, removing Mr. Cooper from the HMBS issuance ranks.

In these strategic transactions, the purchasing issuer pays the selling issuer the present value of the issuer’s uncertificated position, which is the difference between future HECM cash flow and future HMBS cash flow. The buyer becomes the issuer for the purchased HMBS pools, benefiting from the excess spread between the HECM interest rate and the HMBS pass-through rate, and any premiums from future tail issuance. Of course, the buyer also assumes the liabilities of an HMBS issuer: advancing Mortgage Insurance Premium (MIP), borrower draws, realized losses from claims, and many others.

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

HMBS December 2021: Issuers Close Books on Record Breaking Year

Monday, January 3rd, 2022

HMBS issuers rewrote the records books again in December. Nearly $1.5 billion in new HMBS was issued, finishing a record year and setting a record for new original loan pools for the third month in row. Refinancing activity continued to be strong. 123 pools were issued in December, including 54 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

HMBS issuance totaled $13.2 billion for 2021, an all-time record, easily surpassing 2010, the previous HMBS record year with $10.8 billion issued.

December’s production of original new loan pools was a record $1.14 billion, edging out November’s $1.08 billion and October’s $1.07 billion. Approximately $878 million in original new loan pools were issued in December 2020.

December issuance divided into 67 first-participation or original pools, and 56 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 $335 million, well above the typical range.

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

HMBS November 2021 Part II: Santa Comes Early With Sack Full of Deals … and Refi Naughty List

Thursday, December 9th, 2021

Outstanding HMBS remained near its all-time high of $56.8 billion in November 2021 as a slew of big issuer transactions shuffled the deck, with AAG selling nearly all its HMBS issuer portfolio to Reverse Mortgage Funding and Mr. Cooper Group selling its HMBS portfolio, along with its reverse mortgage assets, to Mortgage Assets Management, LLC (“MAM”).

Meanwhile, very high levels of both issuance and HECM loan payoffs continued. Driven by extraordinary levels of refinancing, HMBS payoffs exceeded $1 billion for the ninth month in a row. Outstanding HMBS fell by $30 million, despite record new issuance. Any HMBS investor hoping for a cooling off of prepayments will be disappointed by November’s data. After receiving a bag of rocks for Halloween in October, and the turkey that was November, expect a stocking full of coal in December. October’s payoffs totaled $1.2 billion for a 23% CPR (Conditional Prepayment Rate, or annual rate of payoffs), but November’s payoffs set a new record for both amount and speed: over $1.3 billion, for a blistering 25% CPR.

According to Ginnie Mae data, AAG was listed as the issuer of record for 1,529 HMBS pools totaling $13.1 billion as of October month-end. As of November month-end, AAG is listed as the issuer of record for 46 pools totaling $1.4 billion. Reverse Mortgage Funding is now the issuer of record for nearly 3,800 pools totaling over $23.6 billion, almost 42% of all outstanding HMBS. The November month-end Ginnie Mae data release does not yet reflect the MAM/Mr. Cooper transaction. Mr. Cooper is still shown as issuer of record for over 2,000 HMBS pools totaling more than $4.3 billion.

In these strategic transactions, the purchasing issuer pays the selling issuer the present value of the issuer’s uncertificated position, which is the difference between future HECM cash flow and future HMBS cash flow. The buyer becomes the issuer for the purchased HMBS pools, therefore benefits from the excess spread of the HECM interest rate over the HMBS pass-through rate, and also receives premiums from future tail issuance. Of course, the buyer also assumes the many liabilities of an HMBS issuer: advancing Mortgage Insurance Premium (“MIP”), borrower draws, realized losses from claims, and many others.

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. In the first eleven months of 2021, HMBS new issuance already exceeds $11.7 billion, a new record.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $255 million, less than 19% of the total for the first time ever.

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

HMBS November 2021: Issuers Give Thanks for Record-Smashing Month

Wednesday, December 1st, 2021

HMBS issuers rewrote the records books in November, posting yet another $1.2 billion month and setting new HMBS records for both total annual issuance and monthly original loan pools. Refinancing activity continued to be strong. 96 pools were issued in November, including 52 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

With November’s activity, HMBS issuance now stands at $11.7 billion for 2021, an all-time record. The previous all-time HMBS annual volume year was 2010, with $10.8 billion issued.

November’s production of original new loan pools was a record $1.08 billion, edging out October’s previous record $1.07 billion. Approximately $765 million in original new loan pools were issued in November 2020.

November issuance divided into 63 first-participation or original pools, and 33 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 $148 million, below the typical range.

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

HMBS October 2021 Part II: Record Issuance Drives HMBS Supply

Tuesday, November 9th, 2021

Outstanding HMBS rose to a record $56.8 billion in October 2021, as high levels of both issuance and HECM loan payoffs continued. HMBS payoffs exceeded $1 billion for the eighth month in a row. Outstanding HMBS rose by about $90 million. These big numbers, very similar to September’s totals, reflect continued high levels of refinancing. Low interest rates and high home values allow more senior homeowners to borrow larger HECM loans.

Despite sharply declining refinance volume in the forward mortgage market, HECMs refinancing remains strong. According to multiple sources, refinancing accounts for as much as one half of new originations.

In 2019, HMBS posted its lowest annual issuance total in five years. But in 2020, low interest rates, rising home prices, and a higher lending limit boosted production significantly, to a near-record $10.6 billion. In the first ten months of 2021, HMBS new issuance already exceeds $10.4 billion.
Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $238 million, less than 20% of the total.

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

HMBS October 2021: Will Refis Come Back to Haunt HMBS?

Monday, November 1st, 2021

HMBS issuance remained strong in October. HMBS issuers posted another $1.2 billion in total issuance volume and set another new record for new loan pools, tempered by yet another month of strong refinance activity. 102 pools were issued in October, including 50 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 will fall in November, as nearly $10.5 billion was issued in the first ten months.

October’s production of original new loan pools was a record $1.07 billion, edging September’s previous record of $1.03 billion. Approximately $674 million in original new loan pools were issued in October 2020.

September issuance divided into 62 first-participation or original pools, and 40 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 $135 million, below the typical range.

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

HMBS September 2021 Part II: Big Summer Concludes

Wednesday, October 13th, 2021

Outstanding HMBS rose to a record $56.7 billion in September 2021, as high levels of both issuance and HECM loan payoffs continued. HMBS payoffs once again exceeded $1 billion, for the seventh month in a row. Outstanding HMBS increased by about $106 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 2020’s low interest rates and higher lending limits boosted production to a near-record $10.6 billion. As mentioned in previous blogs, for the first nine months of 2021, HMBS new issuance already exceeds $9 billion, on pace to set a new annual volume record.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $238 million, only 19.8% of the total.

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

2021Q3 HMBS Issuer League Tables – Annual Volume Record in the Crosshairs

Friday, October 1st, 2021

AAG continued its #1 HMBS issuer ranking for the first nine months of 2021 with $2.585 billion of issuance and 28% market share. FAR stayed close behind in second with $1.985 billion issued and 21.4% market share. Longbridge eked past RMF to third with $1.530 billion issued and 16.5% market share. RMF at fourth had $1.506 billion issued with a 16.2% market share. PHH Mortgage again rounded out the Top Five, with $1.120 billion and a 12% market share. These five issuers continue to account for 94% of all HMBS issuance, consistent with past performance. There are 14 active HMBS issuers year to date, though Mutual of Omaha and The Money House did not issue in the third quarter.

2021Q3 saw $3.45 billion of HMBS issued, up 9% from last quarter’s $3.16 billion and the third consecutive quarterly issuance record. With three months to go, the industry is on track to exceed $12 billion of HMBS issuance in 2021.

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

HMBS September 2021: Try to Remember This Kind of September

Friday, October 1st, 2021

HMBS issuers posted record totals in September, with the highest monthly issuance volume this year, and another record for new loan pools. They issued just over $1.2 billion in new HMBS, as refinancing activity continued to be strong. 107 pools were issued in September, including 47 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 will fall this year, as nearly $9.3 billion was issued in the first nine months.

September’s production of original new loan pools was a record $1.03 billion, easily surpassing August’s $880 million, July’s previous-record $937 million, June’s $823 million, May’s $862 million, April’s $900 million, March’s $671 million, February’s $693 million, and January’s $552 million. Approximately $693 million in original new loan pools were issued in September 2020.

September issuance divided into 60 first-participation or original pools, and 47 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 $189 million, within the typical range.

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