Archive for the ‘HMBS’ Category

HMBS January 2024 Part II: Shadow Sees Groundhog

Friday, February 9th, 2024

The reverse mortgage industry’s loan production is a shadow of its former self, with lower origination and loan payoff rates that change little from month to month. In the latest scene from Groundhog Day II, HMBS payoff speeds in January were strikingly similar to those in December; Mandatory Purchases and natural payoffs were approximately 10.1% and 5.9% per annum, respectively. January payoffs totaled about $814 million compared to December’s $819 million. Outstanding HMBS decreased slightly to $58.8 billion.

As mentioned in previous blogs, Ginnie Mae took over RMF’s HMBS portfolio last January. “Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 4,027 former RMF pools. About $315 million of Issuer 42’s portfolio paid off in January, but Issuer 42 still accounts for $17.9 billion, or 30% of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 now has well over $1 billion uncertificated position, that is, the excess of their portfolio’s HECM asset balance over the balance of their HMBS liability.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, 63% of HMBS payoffs last month were due to Mandatory Purchase, the highest percentage in nearly five years, totaling about $514 million, an increase from last month’s $501 million, remaining above the average for calendar years 2023 ($504 million per month) and 2022 ($315 million per month).

Including the Mandatory Purchases, HMBS paid off at a 16.0% annual rate in January, and 17.1% over the last 12 months. Exclusive of Mandatory Purchases, the rate of HMBS payoffs has fallen significantly over the past 12 months. Natural payoffs (those other than Mandatory Purchases) for the 12 month period ending January 30th were 7.4% per annum, compared to 13.2% for the prior 12 month period.

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

HMBS January 2024: Unhappy New Year

Thursday, February 1st, 2024

The HMBS new issue market was slightly lower in January compared to December.  HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $445 million in January, $12 million lower than December’s $457 million. 79 pools were issued in each of January and December.  Except for the early days of Ginnie Mae’s HMBS program (2009 and prior), January’s $445 million issuance was the fourth lowest monthly tally ever.  Aside from March 2023’s $442 million, one would have to look back to 2014 to find lower monthly volume.

FAR was the top issuer in January with $155 million – close to December’s $157 million.  Issuance from Longbridge increased by ~$3 million to $93 million.  PHH and Mutual of Omaha issued $83 million and $75 million respectively.  Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.

Total HMBS issuance for 2023 was $6.5 billion, less than half of 2022’s record $14 billion issued.  2024 is off to a slow start with January’s issuance being $78 million lower than January 2023’s $523 million.

January’s original (first participation) production of $280 million was in line with December’s $282 million.  January’s original new loan pool production was much less than that of January 2023, when approximately $347 million in original new HMBS pools were issued.

The 79 pools issued in January consisted of 21 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. Last month’s tail pool issuances totaled $165 million, below the typical range.

Notable in the January HMBS issuance data are 21 pools with aggregate pool size less than $1 million. Issuers are taking advantage of Ginnie Mae’s provision to issue pools as small as $250,000. This represents $12.3 million of UPB that may not otherwise have been issued in January. Ginnie Mae issued APM 23-11 in September which allows participations from the same loan to be pooled more than once in the same month. The aggregate of participations pooled in January for which more than one participation from the same loan was pooled is $57.2 million.

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

HMBS December 2023 Part II: Will Boring New Year’s Eve Party Bring Sobriety to RM Industry?

Wednesday, January 10th, 2024

HMBS payoff speeds in December were basically unchanged from November; Mandatory Purchases and natural payoffs were approximately 9.9% and 6.2% per annum, respectively. December payoffs totaled about $819 million compared to November’s $825 million. Outstanding HMBS decreased slightly and remains just under $59 billion.

As mentioned in previous blogs, Ginnie Mae took over RMF’s HMBS portfolio last December. “Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 4,030 former RMF pools. About $300 million of Issuer 42’s portfolio paid off in December, but Issuer 42 still accounts for $18.1 billion, or about 31% of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 now has well over $1 billion uncertificated position, that is, the excess of their portfolio’s HECM asset balance over the balance of their HMBS liability.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, 61% of HMBS payoffs last month were due to Mandatory Purchase, totaling about $502 million, a decrease from last month’s $512 million, remaining above the average for the prior 11 months of 2023 ($497 million per month) and all of 2022 ($315 million per month).

Including the Mandatory Purchases, HMBS paid off at a 16.1% annual rate in December, and 17.0% over the last 12 months. Exclusive of Mandatory Purchases, the rate of HMBS payoffs has fallen significantly over the past 12 months. Natural payoffs (those other than Mandatory Purchases) for the 12 month period ending December 30th were 7.4% per annum, compared to 14.2% for the prior 12 month period.

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

2023 Full Year HMBS Issuer League Tables

Wednesday, January 3rd, 2024

FAR keeps the crown as lead HMBS issuer for 2023, with $2.39 billion issued and 36.9% market share. Longbridge was second, with $1.39 billion issued and 21.5% market share, PHH was third with $1.05 billion issued and 16.3% market share, and Mutual of Omaha was fourth with $967.5 million issued and 14.9% market share. Rank order was unchanged during the quarter. The Top Four issuers accounted for almost 90% of all HMBS issuance in 2023.

2023Q4 saw $1.58 billion issued, down from Q3’s $1.72 billion, for total annual issuance of $6.485 billion. As mentioned in previous blogs, 2023 produced less than half of 2022’s record $14 billion of HMBS issuance.

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

HMBS December 2023: Coal in the Stocking

Tuesday, January 2nd, 2024

The HMBS new issue market was substantially off in December compared to November. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $457 million, $104 million lower than November’s $561 million. 79 pools were issued in December compared to 110 in November. With the exception of March 2023, December’s issuance is the lowest since 2014.

FAR was the top issuer in December with $157 million – down from November’s $185 million and October’s $216 million. Issuance from Longbridge dropped from $133 million in November to $90 million in December. Mutual of Omaha issued $83 million in December compared to $102 million in November. Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.

HMBS issuance set a record in 2022, with nearly $14 billion issued. Total issuance for 2023 is approximately $6.5 billion.

December’s original (first participation) production of $282 million was down from November’s $358 million.

The 79 pools issued in December consisted of 19 first-participation or original pools, 59 tail pools, and one pool with both new production and tail participations. 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. Last month’s tail pool issuances totaled $174 million, below the typical range.

Notable in the December HMBS issuance data are 25 pools with aggregate pool size less than $1 million. Issuers are taking advantage of Ginnie Mae’s provision to issue pools as small as $250,000. This represents $15.6 million of UPB that may not otherwise have been issued in December. Ginnie Mae issued APM 23-11 in September which allows participations from the same loan to be pooled more than once in the same month. Both of these provisions are designed to provide warehouse financing relief to issuers.

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

HMBS November Part II: Prepayments Fall Significantly

Monday, December 11th, 2023

HMBS payoff speeds decreased in November; Mandatory Purchases and natural payoffs were 10.0% and 6.1% per annum, respectively. November payoffs totaled about $825 million. Outstanding HMBS increased slightly and remains just under $59 billion.

As mentioned in previous blogs, Ginnie Mae took over RMF’s HMBS portfolio last December. “Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 4,033 former RMF pools. About $301 million of Issuer 42’s portfolio paid off in November, but Issuer 42 still accounts for $18.3 billion, or about 31% of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 now has well over a $1 billion uncertificated position, that is, the excess of the portfolio’s HECM asset balance over the balance of its HMBS liability.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, 62% of HMBS payoffs last month were due to Mandatory Purchase, totaling about $512 million, a decrease from last month’s $531 million, but remaining above the average for the prior 10 months of 2023 ($496 million per month) and all of 2022 ($315 million per month).

Including the Mandatory Purchases, HMBS paid off at a 16.1% annual rate in November, and 16.9% over the last 12 months. Exclusive of Mandatory Purchases, the rate of HMBS payoffs has fallen significantly over the past 12 months. Natural payoffs (those other than Mandatory Purchases) for the 12 month period ending November 30th were 7.4% per annum, compared to 15.2% for the prior 12 month period.

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

HMBS November 2023: If It Looks Like a Turkey, and Walks Like a Turkey, It’s…

Friday, December 1st, 2023

The HMBS new issue market was slightly off in November compared to October. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $561 million in November, relatively the same as October’s $565 million. 110 pools were issued.

FAR was the top issuer in November with $185 million – down from October’s $216 million and September’s $197 million; issuance from Longbridge and Mutual of Omaha each increased approximately $10 million – $134 million and $102 million respectively. Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.

HMBS issuance set a record in 2022, with nearly $14 billion issued. HMBS issuers are unlikely to reach half that total in 2023, with year-to-date production less than $6.1 billion through November.

November’s original (first participation) production of $358 million was down from October’s $374 million. November’s first participation issuance also included a $3.3 million pool of seasoned loans.

The 110 pools issued in November consisted of 19 first-participation or original pools, 88 tail pools and 3 pools with both new production and tail participations. 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. Last month’s tail pool issuances totaled $204 million, below the typical range.

Notable in the November HMBS issuance data are 38 pools with aggregate pool size less than $1 million. Issuers are taking advantage of Ginnie Mae’s provision to issue pools as small as $250,000. This represents $21.8 million of UPB that may not otherwise have been issued in November. Ginnie Mae recently issued APM 23-11 which now allows participations from the same loan to be pooled more than once in the same month. Both of these provisions are designed to provide warehouse financing relief to Issuers.

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

HMBS Issuance Commentary October 2023 Part II

Thursday, November 9th, 2023

HMBS payoff speeds increased slightly in October; Mandatory Purchases and natural payoffs were approximately 10.1% and 7.6% per annum, respectively. October payoffs totaled about $925 million. Outstanding HMBS decreased slightly and is now just under $59 billion.

As mentioned in previous blogs, Ginnie Mae took over RMF’s HMBS portfolio last December. “Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 4,037 former RMF pools. About $342 million of Issuer 42’s portfolio paid off in October, but Issuer 42 still accounts for $18.5 billion, or 31.4% of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 now has more than a $1 billion uncertificated position, that is, the excess of its HECM asset balance over the balance of its HMBS liability.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, 57.6% of HMBS payoffs last month were due to Mandatory Purchases, totaling about $531 million, an increase from last month’s $512 million, remaining above the average for the prior nine months of 2023 ($501 million per month) and all of 2022 ($315 million per month).

Including the Mandatory Purchases, HMBS paid off at a 17.7% annual rate in October, and 16.8% over the last 12 months. Exclusive of Mandatory Purchases, the rate of HMBS payoffs has fallen significantly over the past 12 months. Natural payoffs (those other than Mandatory Purchases) for the 12 month period ending October 31st were 7.5% per annum, compared to 16.2% for the prior 12 month period.

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

HMBS October 2023: [Insert Halloween Metaphor Here]

Wednesday, November 1st, 2023

The HECM market remains scared, spooked, and haunted by the specter of high interest rates. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $565 million in October, compared to September’s $638 million. Only 87 pools were issued.

FAR was the top issuer in October with $216 million – up from September’s $197 million; Longbridge was the only other issuer to top $100 million. Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.

HMBS issuance set a record in 2022, with nearly $14 billion issued. HMBS issuers are unlikely to reach half that total in 2023, with year-to-date production less than $5.5 billion through October.

October’s original (first participation) production of $374 million was down from September’s $445 million. The decrease in first participation issuance was partly due to Guild Mortgage Company issuing one $7.5 million pool in October, compared to their four months of production totaling $67 million issued in September. September’s first participation issuance also included a $7.7 million pool of seasoned loans; no seasoned pools were issued in October.

The 87 pools issued in October consisted of 24 first-participation or original pools and 63 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. Last month’s tail pool issuances totaled $199 million, below the typical range.

Notable in the October HMBS issuance data are 23 pools with aggregate pool size less than $1 million. Issuers are taking advantage of Ginnie Mae’s provision to issue pools as small as $250,000. This represents $13.4 million of UPB that may not otherwise have been issued in October. Ginnie Mae recently issued APM 23-11 which now allows participations from the same loan to be pooled more than once in the same month. Both of these provisions are designed to provide warehouse financing relief to Issuers.

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

HMBS September 2023 Part II: Waiting For Shoes To Drop

Wednesday, October 11th, 2023

HMBS payoff speeds declined in September; Mandatory Purchases and natural payoffs were approximately 9.8% and 7.4% per annum, respectively, though adjusted for day count about the same prepayment rates as August. September payoffs totaled about $900 million. Outstanding HMBS increased for the first time since February 2023 and is now just over $59 billion.

As mentioned in previous blogs, Ginnie Mae took over RMF’s HMBS portfolio last December. “Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 4,040 former RMF pools. About $337 million of Issuer 42’s portfolio paid off in September, but Issuer 42 still accounts for $18.76 billion, or about 32% of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 now has an approximate $1 billion uncertificated position, that is, the excess of their portfolio’s HECM asset balance over the balance of their HMBS liability.

When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then may assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, 57% of HMBS payoffs last month were due to Mandatory Purchase, totaling about $512 million, a decline from last month’s $550 million, but still above the average for the prior eight months of 2023 ($500 million per month) and all of 2022 ($315 million per month).

Including the Mandatory Purchases, HMBS paid off at a 17.2% annual rate in September, and 16.7% over the last 12 months. Exclusive of Mandatory Purchases, the rate of HMBS payoffs has fallen significantly over the past 12 months. Natural payoffs (those other than Mandatory Purchases) for the 12 month period ending September 30th were 7.7% per annum, compared to 16.9% for the prior 12 month period.

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