Archive for the ‘HMBS’ Category

HMBS September 2022: New School Year May Bring Difficult Lessons

Monday, October 3rd, 2022

HECM Mortgage-Backed Securities (“HMBS”) issuance fell in September to $966 million, falling for the fifth straight month as higher interest rates continued to take their toll. HMBS issuance remained below $1 billion for only the second time in 18 months.

With nine months in the books and over $11.6 billion issued, HMBS is still on pace to eclipse 2022’s record $13.2 billion issuance total. However, for the foreseeable future higher interest rates will challenge the reverse mortgage market, driving down home price appreciation and the Principal Limit Factors that determine how much HECM originators can lend against those likely-falling home values.

September’s original (first participation) production fell to $744 million, slightly below August’s $749 million, but significantly below July’s $975 million, June’s $1.1 billion, May’s $1.2 billion, and barely half April’s record $1.4 billion in new issuance. September’s original new loan pool production was also much less than that of September 2021, when approximately $1.03 billion in original new HMBS pools were issued.

90 pools were issued in September: 42 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. Last month’s tail pool issuances totaled $222 million, within the typical range.

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

HMBS August 2022 Part II: Refi Retreat Takes a Holiday

Monday, September 12th, 2022

HMBS prepayments leveled off in August, as the refinancing wave paused its retreat. August payoffs totaled just over $1 billion, the second lowest amount in 18 months. Outstanding HMBS rose to a record $59.1 billion, helped by a faster roll-up from rising interest rates.

The HECM refinance wave was assisted by a higher HECM lending limit (now $970,800) and surging home prices. Higher interest rates have finally caught up with the HMBS market, driving down principal limit factors (initial loan-to-value ratios) sharply.

In August HMBS paid off at slightly less than a 20% annual rate, versus about 18% in July, but adjusting for day count (23 versus 20 in August and July, respectively), August payoffs were slightly lower.

HMBS prepayment rates are bound to fall further in the remaining four months of 2022. Interest rates resumed their rise, and lenders report that “credit pulls” (indications from credit bureaus that borrowers may refinance), have fallen in recent weeks.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled about 34% of the total, another recent monthly high.

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

HMBS August 2022: Summer Doldrums Continue

Thursday, September 1st, 2022

HECM Mortgage-Backed Securities (“HMBS”) issuance dropped in August to $988 million, falling for the fourth straight month as higher interest rates continued to take their toll. HMBS issuance fell below $1 billion for the first time in 17 months.

HMBS issuance totaled $13.2 billion for 2021, easily surpassing the previous record set in 2010. With eight months in the books and over $10 billion issued, HMBS is still on pace to set another new record in 2022.

August’s original (first participation) production fell to $749 million, significantly below July’s $975 million, $1.1 billion in June, $1.2 billion in May and barely half of April’s record $1.4 billion in new issuance. August’s original new loan pool production was also less than that of August 2021, when approximately $880 million in original new HMBS pools were issued.

87 pools were issued in June: 39 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. Last month’s tail pool issuances totaled $239 million, within the typical range.

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

HMBS July 2022 Part II: Refi Retreat Continues

Tuesday, August 9th, 2022

HMBS payoffs fell again in July, as the refinancing wave continued its retreat. July payoffs totaled about $1 billion, the lowest amount in 17 months. Outstanding HMBS rose to a record $59 billion due to a combination of fairly strong new issuance, a faster roll-up from rising interest rates and the drop in payoffs.

The HECM refinance wave was assisted by a higher HECM lending limit (now $970,800) and surging home prices. Higher interest rates have finally caught up with the HMBS market, driving down principal limit factors (initial loan-to-value ratios) sharply.

In July HMBS paid off at an 18% annual rate, the first 1-month payoff rate below 20% in over a year, but still above historical averages. HMBS prepayment rates are bound to fall further in the third quarter.

2021 broke all previous records with a $13.2 billion HMBS issuance total. 2021’s record may still fall: over $9.7 billion was issued in the first seven months of 2022.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $303 million, 31% of the total, the highest percentage in a year and a half.

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

HMBS July 2022: Summer Doldrums

Monday, August 1st, 2022

HECM Mortgage-Backed Securities (“HMBS”) issuance fell in July to $1.2 billion, falling for the third straight month as the refinancing wave continued to ebb. Production remains strong by historical standards, but the downward trend is clear.

HMBS issuance totaled $13.2 billion for 2021, easily surpassing the old record from 2010. With seven months in the books and over $9 billion issued, HMBS is still on pace to set another new record in 2022.

July’s original (first participation) production fell to $975 million, compared to $1.1 billion in June, $1.2 billion in May and well below April’s record of $1.4 billion in new issuance. Still, July’s original new loan pool production exceeded that of July last year, when approximately $937 million in original new HMBS pools were issued.

July’s 94 pools broke down into 49 first-participation or original pools, and 45 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 $216 million, within the typical range.

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

HMBS June 2022 Part II: Refi Swoon Began in June

Wednesday, July 13th, 2022

HMBS payoffs fell in June, as the refinancing wave finally began its retreat. June payoffs totaled just over $1.1 billion, the lowest amount in over a year. Outstanding HMBS rose to a record $58.6 billion due to continued strong new issuance and a faster roll-up from rising interest rates.

The HECM refinance wave was assisted by the higher HECM lending limit (now $970,800) and surging home prices (nearly 20% year-over-year, according to some measures). Higher interest rates have finally caught up with the HMBS market, driving down principal limit factors (initial loan-to-value ratios) sharply.

June’s $1.1 billion payoff represents a 21% annual rate, still high by historical standards but bound to fall further in the third quarter. Given the lag between HECM loan origination and HMBS issuance, the new HECMs backing June’s HMBS pools still do not fully reflect the rapid rise in interest rates.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $279 million, 25% of the total.

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

2022 First Half HMBS Issuer League Tables – Crown Up For Grabs

Tuesday, July 5th, 2022

AAG remained the #1 HMBS issuer in Q2, with $1.848 billion issued and 21.7% market share, though FAR was less than $12 million away, issuing $1.836 million for a 21.6% market share. Longbridge remained in third with $1.558 billion issued and 18.3% market share, RMF stayed in fourth with $1.507 billion issued and 17.7% market share, and PHH rounded out the Top Five again with $1.150 billion issued for a 13.5% market share.

The Top Five issuers accounted for 93% of all HMBS issuance, down a percent from previous quarters. The same 12 HMBS issuers were again active in the quarter. Mutual of Omaha Mortgage moved up four notches to #7, its largest HMBS issuance tally to date, also explaining the slight drop in aggregate issuance volume for the Top Five issuers.

2022Q2 saw $4.43 billion of HMBS issued, up 9% from last quarter’s record $4.08 billion, and the sixth consecutive quarterly issuance record. That run may be over. However, as mentioned in past blogs, even with the anticipated issuance slowdown in the second half, total 2022 volume could still surpass 2021’s $13.2 billion issuance record.

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

HMBS June 2022: June Too Soon For Swoon, But End to Boon Looms

Friday, July 1st, 2022

HECM Mortgage-Backed Securities (“HMBS”) issuance fell in June to $1.3 billion, compared to $1.5 billion in May and April’s record $1.6 billion, as the refinancing wave continues to ebb. However, production remains strong by historical standards.

Given the lag between HECM loan origination and HMBS issuance, the new HECMs backing June’s HMBS pools do not fully reflect the rapid rise in interest rates over the past several months. The numbers for July issuance will likely show further declines.

HMBS issuance totaled $13.2 billion for 2021, smashing the previous record set in 2010. With only six months in the books and over $8 billion issued, HMBS is still on pace to set another new record in 2022.

June’s original (first participation) production fell to $1.1 billion, compared to $1.2 billion in May, and well below April’s record $1.4 billion in new issuance. Still, June’s original new loan pool production was close to March, which totaled $1.13 billion, February’s $1.12 billion and January’s $1.18 billion. Approximately $823 million in original new loan pools were issued a year ago, in June 2021.

100 pools were issued in June: 53 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 $220 million, within the typical range.

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

HMBS May 2022 Part II: May Too Soon To Begin Swoon Which May Loom in June

Thursday, June 9th, 2022

HMBS payoffs continued in May, as the refinancing wave refuses to ebb. Instead, May payoffs totaled $1.48 billion, just short of March’s 2022 record $1.5 billion. Outstanding HMBS rose to a record $58.3 billion with strong new issuance and a faster roll-up from rising interest rates.

HECM borrowers continue to refinance in large numbers, assisted by a higher HECM lending limit (now $970,800) and surging home prices (nearly 20% year-over-year, according to some measures). So far, rising interest rates have failed to calm this reverse mortgage refinancing wave. The nearly $1.5 billion in payoffs in May represents a 24.6% annual payoff rate.

Given the lag between HECM loan origination and HMBS issuance, the new HECMs backing May’s HMBS pools do not fully reflect the rapid rise in interest rates over the past two months. The numbers for June will test the resilience of this refinancing wave, which began with lower interest rates but continued its momentum from the strong home price appreciation and higher FHA lending limits.

2021 smashed all previous records with a $13.2 billion HMBS issuance total. 2021’s record may fall: over $7.1 billion was issued in the first five months of 2022.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $283 million, 22% of the total.

As a side note, this is New View Advisors’ 300th blog post since we started sharing analysis and observations about the reverse mortgage industry in 2009.  Your input and comments on any of our findings is always welcome.

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

HMBS April 2022 Part II: April May but May June?

Tuesday, May 10th, 2022

HMBS payoffs continued in April, as the refinancing wave diminished slightly but refused to ebb. Instead, April payoffs totaled $1.3 billion, just short of March 2022’s record $1.5 billion. Outstanding HMBS rose to a record $58 billion, with strong new issuance and a faster roll-up from rising interest rates.

HECM borrowers continue to refinance in large numbers, assisted by a higher HECM lending limit (now $970,800) and surging home prices (nearly 20% year-over-year, according to some measures). So far, rising interest rates have failed to calm reverse mortgage refinancings. The $1.3 billion in payoffs in April represents a 24% annual payoff rate.

However, April may be the beginning of the end of H2H refis. Given the lag between HECM loan origination and HMBS issuance, the new HECMs backing April’s HMBS pools do not fully reflect the rapid rise in interest rates over the past two months. The numbers for May and June will test the resilience of this refinancing wave, which began with lower interest rates but continued its momentum from the strong home price appreciation and higher FHA lending limits.

While 2021 surpassed all previous records with $13.2 billion HMBS issued, its record may yet fall: over $5.6 billion was issued in the first four months of 2022.
Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $256 million, 20% of the total.

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