HMBS Issuance Hits New 5-Year Low

HMBS issuers created only $395.6 million in new HMBS pools during April 2014, the smallest monthly HMBS issuance since May 2009. 65 pools were issued, consisting of 31 original issuances and 34 tail pools. By comparison, HMBS issuance totaled $972 million in April 2013, and averaged nearly $800 million per month during 2013. Original HMBS pools are created when a pool of FHA-insured Home Equity Conversion Mortgages (“HECMs”) is securitized for the first time. Tail HMBS issuances are HMBS pools created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance.

Newly originated loans comprise a large majority of HMBS issuance in any given month. As a result, HMBS issuance is a good barometer of recent HECM production. Beginning with FY 2014, HECM principal limits were cut once again, and FHA imposed new restrictions on the initial draw allowed for certain borrowers. The resulting lower HECM production inevitably reduces HMBS production.

Overall Ginnie Mae issuance is down significantly, with only $17.8 billion issued in March 2014, compared to an average of $38 billion per month in FY 2013. (These figures include both forward and reverse, Ginnie Mae I and Ginnie Mae II securities.) This reflects the decline in mortgage originations generally, especially refinancing.

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

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