HMBS March 2024: Spring Ahead

The HMBS new issue market bounced back – at least a little bit – in March. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $447 million, $18 million higher than February’s $429 million. 79 pools were issued in March versus 80 in February. Issuance remains near the historic lows of HMBS’ earliest days (2009 and prior).

FAR was the top issuer in March with $140 million – $2 million lower than February’s $143 million. Issuance from Longbridge increased by $16 million to $99 million. Mutual of Omaha and PHH issued $84 million and $81 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 less than half, at $6.5 billion. 2024 is not off to a good start with total issuance through March totaling just $1.3 billion – $151 million and $2.76 billion lower than at this time in 2023 and 2022, respectively.

March’s original (first participation) production of $268 million was $4 million higher than February’s $264 million, and $9 million higher than that of March 2023, when approximately $259 million in original new HMBS pools were issued.

The 79 pools issued in March consisted of 21 first-participation or original pools 56 tail pools and 2 pools which included both new production and tails. 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 $178 million, below the typical range.

Notable in the March HMBS issuance data are 21 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 $14.7 million of UPB that may not otherwise have been issued in March. 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 March for which more than one participation from the same loan was pooled is $68.6 million of which $3.2 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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