November 2018 HMBS Part II: Market Shrinkage Continues; LiveWell Portfolio Sold; Peak Buyout Ends

HMBS float fell in November as big payoffs continued to outweigh falling issuance. With just under $1 billion in payoffs, total outstanding HMBS ended the month at $55.3 billion, down from about $55.5 billion at the end of October. HMBS float has been range-bound between just under $55 billion to $57 billion for over two years.

As we noted last week, HMBS issuance was only $521 million in November, with no highly seasoned new issuance. However, the usual issuer of highly seasoned original pools was not idle during November. The Ginnie Mae data reveals Reverse Mortgage Funding bought Live Well Financial’ s issuance portfolio totaling just over $4 billion. That gives RMF an outstanding portfolio of almost $12.7 billion, surpassing Nationstar Mortgage as the top issuer portfolio.

Although many loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), Peak Buyout appears to have ended. Peak Buyout is an echo of the peak issuance from 2009 through the first half of 2013. Much of this production has already been repurchased or repaid by borrowers. From now on, billion-dollar-plus payoff months should be the exception rather than the rule.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases accounted for $665 million, or about 70% of the payoffs last month. This continues a general downward trend from the third quarter, which averaged over $750 million in Mandatory Purchases per month.

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

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