HMBS October 2021: Will Refis Come Back to Haunt HMBS?

HMBS issuance remained strong in October. HMBS issuers posted another $1.2 billion in total issuance volume and set another new record for new loan pools, tempered by yet another month of strong refinance activity. 102 pools were issued in October, including 50 first-participation CMT pools. Before January 2021 no new first-participation CMT pools had been issued for many years.

The all-time HMBS annual volume year is 2010, with $10.8 billion issued. That was when Principal Limits were high and no borrower financial assessment safeguards had been established. That record will fall in November, as nearly $10.5 billion was issued in the first ten months.

October’s production of original new loan pools was a record $1.07 billion, edging September’s previous record of $1.03 billion. Approximately $674 million in original new loan pools were issued in October 2020.

September issuance divided into 62 first-participation or original pools, and 40 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. Tail HMBS issuance is essential for HMBS issuers to finance their monthly advances, such as borrower draws and FHA mortgage insurance premiums. Last month’s tail pool issuances totaled $135 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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