Game of Loans II: HMBS Winter Wind Blows Away Supply

HMBS supply shrank significantly in March, falling over $200 million from $56.4 to $56.2 billion. High prepayments and low issuance combined to drive down the total float. The sixth time HMBS supply has declined month to month, this is by far the largest such shrinkage.

Noted in our previous blog on March issuance, reverse mortgage lenders face a long winter of reduced volume, primarily due to the new lower Principal Limit Factors (“PLFs”) for Home Equity Conversion Loans (“HECMs”) effective this fiscal year. HMBS issuance fell to $626 million, the lowest monthly level since September 2014.

We estimate that negative amortization of outstanding pools totaled $210 million, a record. However, the meager issuance and nearly $1.036 billion in payoffs (5th highest ever) resulted in the $200 million reduction in total outstanding HMBS float.

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

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