HREMIC Issuance 2018Q2: Remarkable Resilience

HREMIC issuance for the first half of 2018 was $4.91 billion, on pace to nearly match 2016’s record $9.9 billion of securities issued. However, this volume trend is unlikely to continue based on the slowdown in HMBS. There were 4 transactions for $1.95 billion issued in the second quarter, underwritten by the same two sponsors from Q1, Nomura and Citigroup. For the first half of 2018, Nomura issued $2.6 billion of securities and Citigroup issued $2.4 billion.

HREMIC collateral consists of HMBS, which are Ginnie Mae guaranteed pass-through securities. HMBS are backed by pools of participations of HECMs, which are FHA-insured reverse mortgages. This double layer of government guarantee, combined with the relatively high coupon and favorable prepayment patterns of the underlying loans, results in very favorable execution, even when compared to other Ginnie Mae “forward mortgage” securities.

New View Advisors compiled these rankings from publicly available Ginnie Mae data.

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