HMBS August 2021: Endless Summer of Big Issuance

HMBS issuers posted strong totals in August, with issuance volume strikingly similar to July. There was just under $1.1 billion in new HMBS, as refinancing activity continued to be strong. 107 pools were issued in August, including 42 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

The all-time HMBS annual volume year is 2010 with $10.8 billion issued, when Principal Limits were high and no borrower financial assessment safeguards had been established. That record will likely fall in 2021, as over $8 billion has been issued in the first eight months.

August’s production of original new loan pools was $880 million, compared to July’s record $937 million, June’s $823 million, May’s $862 million, April’s $900 million, March’s $671 million, February’s $693 million, January’s $552 million, and December’s $878 million. Approximately $666 million in original new loan pools were issued in August 2020, and only $390 million in August 2019.

August issuance divided into 57 first-participation or original pools, and 50 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 $210 million, within the typical range.

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

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