HMBS February 2024: Valentine’s Day Massacre

The HMBS new issue market continues its dismal volume in February. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $429 million in February, $16 million lower than January’s $445 million. 80 pools were issued in February and 79 in January. Except for the early days of the Ginnie Mae HMBS program (2009 and prior), February’s $429 million issuance was the second lowest ever. One would have to look to 2014 to find lower monthly volume.

FAR was the top issuer in February with $143 million – $12 million lower than January’s $155 million. Issuance from Longbridge decreased by $10 million to $82.6 million. PHH and Mutual of Omaha issued $83 million and $74 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. Total issuance for 2023 was approximately $6.5 billion. 2024 is off to a bad start with total issuance through February totaling $874 million – $156 million lower than this time last year and $1.86 billion lower than this time in 2022.

February’s original (first participation) production of $264 million was $16 million lower than January’s $280 million. February’s original new loan pool production was much less than that of February 2023, when approximately $336 million in original new HMBS pools were issued.

The 80 pools issued in February consisted of 21 first-participation or original pools and 59 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 February HMBS issuance data are 26 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 $14.3 million of UPB that may not otherwise have been issued in February. 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 February for which more than one participation from the same loan was pooled is $54.9 million of which $2.0 million were first participations.

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

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