HMBS July 2023: Fireworks Fizzle in Market Without Sizzle

The HMBS new issue market posted a weak tally in July 2023 as both tail issuance and new loan production declined. HECM Mortgage-Backed Securities (HMBS) issuance totaled $518 million in July, down significantly from June’s $589 million. 87 pools were issued, also low by historical standards.

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 July.

On March 31, AAG was purchased by Finance of America (FAR), continuing the industry’s consolidation, leaving four issuers with approximately 90% total market share. Last month, FAR was the top issuer with $178 million, and Longbridge was the only other issuer to top $100 million.

HMBS issuance set a new record in 2022, with nearly $14 billion issued. In 2023, HMBS issuers will not come anywhere near those numbers; the first seven months totaled just over $3.7 billion.

July’s original (first participation) production of $335 million was down sharply from June’s $384 million, May’s $353 million, and April’s $379 million. July was very weak by historical standards, barely one-third of July 2022’s $1.2 billion in new issuance.

The 87 pools issued in June consisted of 22 first-participation or original pools and 65 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 $182 million, 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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