March’s HECM endorsement count unexpectedly increased 73% over the month, reaching 3,789 units. However, the increase came almost entirely from AAG’s last gasp of submissions prior to its acquisition by FAR, endorsing 1,970 loans compared to last month’s 468. AAG clearing its backlog won’t alter the macro trend of declining HECM production as long as rates stay high and property values soften. It also underscores the shortcomings associated with relying exclusively on endorsement count as a metric for HECM production. Our full report can be found here: NV Endorsement 2023_03.

HUD’s February Endorsement Snapshot Report was just released on its website. HECM refinance remains at approximately 10% of all endorsements.

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 recent WBWFW reports 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.

There was a slight rebound of HECM endorsements in October, reaching 3,504 units compared to September’s 3,235. Our report can be found here: NV Endorsement 2022_10. Of note, AAG originated 23% of October volume, down from its 38% peak market share achieved in May 2021.

HUD’s September Endorsement Snapshot Report was just released on its website. Endorsements backed by HECM to HECM refis dropped to 811 loans, approximately 25% of overall unit count. At its peak, 50% of all endorsement volume was H2H refis, more than 3,000 a month. Expect ever lower refi volume to continue.

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 WBWFW report samples 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.

HECM Mortgage-Backed Securities (“HMBS”) issuance fell in May to $1.45 billion, down from April’s record $1.6 billion, as the refinancing wave finally began to ebb. However, production remains strong by historical standards.

Given the lag between HECM loan origination and HMBS issuance, new HECMs backing May’s HMBS pools do not fully reflect the rapid rise in interest rates over the past several months. The numbers for June and July issuance will test the resilience of these high levels of HECM loan production, which are sustained by lower interest rates, strong home price appreciation and higher FHA lending limits.

HMBS issuance totaled $13.2 billion for 2021, smashing the previous record set in 2010. With only five months in the books and over $7 billion issued, HMBS is on pace to set another new record in 2022.

May’s original (first participation) production fell to $1.2 billion, well below April’s record of $1.4 billion in new issuance, but exceeding March’s production of original new loan pools totaling $1.13 billion, February’s $1.12 billion and January’s $1.18 billion. Approximately $862 million in original new loan pools were issued a year ago, in May 2021.

103 pools were issued in May: 60 first-participation or original pools, and 43 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 $211 million, within the typical range.

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

6,510 HECMs were endorsed in March, the first time monthly endorsements exceeded 6,000 since late 2017, when the industry was racing to close loans before ML 2017-12 took effect. The March tally is an impressive 26.3% increase over February. Increases were across the board geographically, and among top lenders. Our report can be found here: NV Endorsement 2022_03.

HUD’s February Endorsement Snapshot Report was just released on its website. As interest rates continue to rise, the average interest rate on HECMs appears to have passed its trough.  H2H refis remain high.

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 issuers continued their torrid pace to start the New Year. February saw again nearly $1.4 billion in new HMBS issuance, almost setting a record for new original loan pools for the fifth month in row. Refinancing activity continues to be strong.

HMBS issuance totaled $13.2 billion for 2021, 22% more than the previous record set in 2010, with $10.8 billion issued. With two months in the books, HMBS issuance is on a pace to beat that in 2022.

February’s production of original new loan pools totaled $1.12 billion, just shy of January’s record $1.18 billion, and consistent with December’s $1.14 billion, November’s $1.08 billion and October’s $1.07 billion. Approximately $693 million in original new loan pools were issued a year ago, in February 2021.

98 pools were issued in February: 53 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 $245 million, at the high end the typical range.

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

Outstanding HMBS rose to an all-time high of $57.3 billion in January 2022 as issuance outpaced another big refinance-driven month of payoffs. If the industry resolved to shake off its dependence on refinancings in 2022, that New Year’s resolution (like most others) was broken before February arrived.

Driven by high levels of refinancing, HMBS payoffs exceeded $1 billion for the eleventh month in a row. Outstanding HMBS rose by $259 million despite these near-record payoffs. January’s data is a continuing disappointment to HMBS investors hoping for a cooling off of prepayments. While falling short of December and November’s record payoffs, January came close in both dollar amount and speed: $1.2 billion, representing a 23% annual payoff rate.

We noted last month that AAG sold most of its HMBS issuance portfolio to RMF, and Mr. Cooper Group sold its HMBS portfolio to Mortgage Assets Management, LLC (“MAM”). The resulting consolidation leaves the top five issuers accounting for about 93% of all outstanding HMBS.

RMF is now the issuer of record for over 3,800 pools totaling more than $23.2 billion, 40%+ of all outstanding HMBS. The Mr. Cooper purchase puts MAM in third place with a portfolio of over 3,100 HMBS pools totaling $7.3 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, and therefore benefits from the excess spread of the HECM interest rate over the HMBS pass-through rate. The buyer also receives any premiums from future tail issuance. Of course, the buyer also assumes the many liabilities of an HMBS issuer: advancing MIP, borrower draws, realized losses from claims, and many others.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $256 million, about 21% of the total.

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

HMBS issuers continued their torrid pace to start the New Year. January saw nearly $1.4 billion in new HMBS, setting a record for new original loan pools for the fourth month in row. Refinancing activity continued to be strong.

January’s production of original new loan pools was a record $1.18 billion, edging December’s $1.14 billion, November’s $1.08 billion and October’s $1.07 billion. Approximately $552 million in original new loan pools were issued in January 2021.

A new issuer has appeared: Mortgage Assets Management, LLC (“MAM”), replacing Reverse Mortgage Solutions, from whom MAM acquired HMBS assets last year. MAM issued 3 tail pools in January.

91 pools were issued in December: 55 first-participation or original pools, and 36 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 $185 million, within the typical range.

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

December finished with a record monthly HECM endorsement count for 2021 of 5,218 loans, bringing the total annual endorsement count to 53,020 units, exceeding by 18.7% the 44,661 HECMs endorsed in 2020. AAG, RMF and FAR accounted for 52.3% of all HECMs endorsed in 2021, slightly higher than the 50.7% seen in 2020. Our report can be found here: NV Endorsement 2021_12.

HUD’s November Endorsement Snapshot Report was just released on its website. “HECM for Refinance” remains at more than 50% of all HECMs endorsed in the month.

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.

Reverse Mortgage Funding became the #1 HMBS issuer in 2021, with $4.09 billion issued and near 31% market share, due in part to its acquisition of AAG’s HMBS portfolio during the quarter. Ginnie Mae gives full issuance credit to the surviving/purchasing HMBS Issuer. FAR remained in second with $2.83 billion issued and 21.4% market share, Longbridge was third with $2.18 billion issued and 16.5% market share, and PHH was fourth with $1.67 billion issued and 12.7% market share. AAG fell to fifth, rounding out the Top Five, with $1.64 billion and a 12.4% market share. Giving credit to AAG for its full-year book of business, AAG annual issuance volume would have been approximately $4.23 billion.

Once again, these same five issuers accounted for 94% of all HMBS issuance, consistent with past performance. There were 14 active HMBS issuers in 2021, though Nationstar and The Money House did not issue in the fourth quarter. Expect Nationstar to drop from the League Tables in 2022 as they exited the business in December.

2021Q4 saw $3.91 billion of HMBS issued, up 13% from last quarter’s $3.45 billion and the fourth consecutive quarterly issuance record. As mentioned in many of our previous blogs, $13.19 billion of HMBS issuance in 2021 easily surpassed 2010’s previous record $10.8 billion, a time when Principal Limits were high and Financial Assessment non-existent.

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

New View Advisors and Recursion November 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 11_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.