HMBS March 2023: March Roars Out Like a Lamb

The HMBS new issue market fell again to new lows. HECM Mortgage-Backed Securities (“HMBS”) issuance fell sharply in March to $442 million, falling for the eleventh straight month. Only 53 pools were issued. It was the lowest month of issuance since June 2014. As we said last month, this HMBS Winter of Discontent will be long one.

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 March.

On March 31, American Advisors Group (“AAG”) was purchased by Finance of America, continuing the industry’s consolidation, leaving 4 issuers with approximately 90% total market share. In its last month, AAG still led HMBS issuers with $106 million issued.

HMBS issuance set a new record in 2022, with nearly $14 billion issued. In 2023, HMBS issuers are unlikely to come anywhere near those numbers; the first quarter totaled just under $1.5 billion.

March’s original (first participation) production fell to $259 million, down from $322 million in February, $347 million in January, $448 million in December, $516 million in November and less than one-fifth of April 2022’s record $1.4 billion in new issuance.

The 53 pools issued in March consisted of 19 first-participation or original pools and 34 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. With Ginnie Mae/RMF abstaining from issuance, last month’s tail pool issuances totaled $183 million, below the typical range.

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

Comments are closed.