HMBS April 2023: April Showers Bring … Not Much

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The HMBS new issue market posted its best month of 2023, but that’s not saying much. HECM Mortgage-Backed Securities (“HMBS”) issuance rebounded slightly in April to $534 million, rising month to month for the first time in a year. 80 pools were issued, low by historical standards, but much better than the 53 pools issued in March.

On November 30 of last year, Reverse Mortgage Funding (“RMF”), the largest HMBS issuer of record, filed for bankruptcy. As a result, Ginnie Mae acquired RMF’s HMBS portfolio. Ginnie Mae/RMF (aka “Issuer 42”) issued no HMBS pools in April.

On March 31, American Advisors Group (“AAG”) was purchased by Finance of America Reverse (“FAR”), continuing the industry’s consolidation, leaving four issuers with approximately 90% total market share. Last month, FAR was the top issuer with $207 million.

HMBS issuance set a new record in 2022, with nearly $14 billion issued. In 2023, HMBS issuers are very unlikely to come anywhere near those numbers; the first four months totaled just over $2 billion.

April’s original (first participation) production rose to $379 million, much better than March’s anemic $259 million, February’s $322 million, and January’s $347 million. However, April was weak by historical standards, less than one-third of April 2022’s record $1.4 billion in new issuance.

The 80 pools issued in April consisted of 25 first-participation or original pools and 55 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. With Ginnie Mae/RMF abstaining from issuance, last month’s tail pool issuances totaled $155 million, well below the typical range.

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

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