HMBS June 2023: June Swoon In Tune With Industry Gloom

The HMBS new issue market posted its biggest month of 2023, but once again that’s not saying much. Strong tail issuance masked a decline in new loan production. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $588 million in June, just topping May’s $580 million. 89 pools were issued, 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 June.

On March 31, American Advisors Group 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 $195 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 six months totaled just over $3 billion.

June’s original (first participation) production of $384 million was the most this year, better than May’s $353, April’s $379 million, March’s anemic $259 million, February’s $322 million, and January’s $347 million. Still, June was very weak by historical standards, less than one-third of June 2022’s $1.1 billion in new issuance.

The 89 pools issued in June consisted of 27 first-participation or original pools and 62 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 $204 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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