HMBS February 2022 Part II: Another Issuer Exits

March 9th, 2022

Outstanding HMBS rose to an all-time high of $57.6 billion in February 2022 as issuance outpaced another refinance-driven month of payoffs. HMBS payoffs exceeded $1 billion for the twelfth month in a row. Outstanding HMBS rose by about $288 million. Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $252 million, only 21% of the total. While falling short of January, December, and November’s record payoffs, February came close in both dollar amount and speed: just under $1.2 billion, representing a 22% annual payoff rate.

The latest Ginnie Mae data release also reveals another HMBS issuance portfolio sale: Cherry Creek Mortgage sold its $300 million HMBS portfolio to PHH Mortgage. We noted two months ago that American Advisors Group sold most of its HMBS issuance portfolio to Reverse Mortgage Funding, and Mr. Cooper Group sold its HMBS portfolio to Mortgage Assets Management, LLC (MAM). The resulting consolidation leaves the top five issuers accounting for about 93% of all outstanding HMBS.

In these strategic transactions, the purchasing issuer pays the selling issuer the present value of the issuer’s uncertificated position, which is the difference between future HECM cash flow and future HMBS cash flow. The buyer becomes the issuer of record for the purchased HMBS pools, benefiting from the excess spread of the HECM interest rate over the HMBS pass-through rate, and receives any premiums from future tail issuance. Of course, the buyer also assumes all the liabilities of an HMBS issuer: advancing Mortgage Insurance Premium (MIP), borrower draws, realized losses from claims, and many others.

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

HECM Endorsement Analytics – February 2022

March 7th, 2022

5,153 HECMs were endorsed in February, a 10.7% drop from January’s 5,771 HECM endorsements, but still the longest sustained period of 5,000+ monthly endorsements since before financial assessment began. All top originators experienced volume declines from January including AAG endorsing 1,495 loans, down 7%, FAR endorsing 407 loans, down 23%, and RMF endorsing 475 loans, down 1%. Our report can be found here: NV Endorsement 2022_02.

HUD’s January Endorsement Snapshot Report was just released on its website. There has been no slowing down in HECM refinance activity, continuing to outpace traditional HECM endorsement volume.

New View Advisors offers its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:

–Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
–WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
–Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from our WBWFW report are at the end of this endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

HMBS February 2022: For HMBS Issuers, Every Day is Valentine’s Day

March 1st, 2022

HMBS issuers continued their torrid pace to start the New Year. February saw again nearly $1.4 billion in new HMBS issuance, almost setting a record for new original loan pools for the fifth month in row. Refinancing activity continues to be strong.

HMBS issuance totaled $13.2 billion for 2021, 22% more than the previous record set in 2010, with $10.8 billion issued. With two months in the books, HMBS issuance is on a pace to beat that in 2022.

February’s production of original new loan pools totaled $1.12 billion, just shy of January’s record $1.18 billion, and consistent with December’s $1.14 billion, November’s $1.08 billion and October’s $1.07 billion. Approximately $693 million in original new loan pools were issued a year ago, in February 2021.

98 pools were issued in February: 53 first-participation or original pools, and 45 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 $245 million, at the high end the typical range.

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

New View Advisors and Recursion Reverse Mortgage Prepayment Indices – January 2022

February 9th, 2022

New View Advisors and Recursion January 2022 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 01_2022. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This new expanded set of prepayment data is calculated using dollar principal balance, not unit count.

The enhanced data set shows current trends in prepayment activity by product type and Principal Limit Factors (PLFs), and for current 12-month LIBOR PLFs by Expected Rate. HECM loans with higher Expected Rates originated in the year or so prior to the precipitous fall in interest rates brought on by the pandemic are experiencing higher prepayment rates. Therefore, we segregate indices for recent production 12-month LIBOR PLFs into Expected Rates greater than 4% and Expected Rates less than or equal to 4%.

Prepayment speeds are expressed as annualized percentages in three categories: Total Payoffs, Payoffs Other Than Assignments, and Payoffs from Assignment. For each category, we calculate the 1-month, 3-month, 6-month and 12-month CPR, or annual rate of prepayment.

HMBS January 2022 Part II: New Year’s Resolutions Are Hard to Keep

February 9th, 2022

Outstanding HMBS rose to an all-time high of $57.3 billion in January 2022 as issuance outpaced another big refinance-driven month of payoffs. If the industry resolved to shake off its dependence on refinancings in 2022, that New Year’s resolution (like most others) was broken before February arrived.

Driven by high levels of refinancing, HMBS payoffs exceeded $1 billion for the eleventh month in a row. Outstanding HMBS rose by $259 million despite these near-record payoffs. January’s data is a continuing disappointment to HMBS investors hoping for a cooling off of prepayments. While falling short of December and November’s record payoffs, January came close in both dollar amount and speed: $1.2 billion, representing a 23% annual payoff rate.

We noted last month that AAG sold most of its HMBS issuance portfolio to RMF, and Mr. Cooper Group sold its HMBS portfolio to Mortgage Assets Management, LLC (“MAM”). The resulting consolidation leaves the top five issuers accounting for about 93% of all outstanding HMBS.

RMF is now the issuer of record for over 3,800 pools totaling more than $23.2 billion, 40%+ of all outstanding HMBS. The Mr. Cooper purchase puts MAM in third place with a portfolio of over 3,100 HMBS pools totaling $7.3 billion.

In these strategic transactions, the purchasing issuer pays the selling issuer the present value of the issuer’s uncertificated position, which is the difference between future HECM cash flow and future HMBS cash flow. The buyer becomes the issuer for the purchased HMBS pools, and therefore benefits from the excess spread of the HECM interest rate over the HMBS pass-through rate. The buyer also receives any premiums from future tail issuance. Of course, the buyer also assumes the many liabilities of an HMBS issuer: advancing MIP, borrower draws, realized losses from claims, and many others.

Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $256 million, about 21% of the total.

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

HECM Endorsement Analytics – January 2022

February 7th, 2022

There were 5,771 HECM endorsements in January, the highest monthly tally since January 2018. Philadelphia saw the largest monthly increase of 36.4%, with 723 endorsements. Santa Ana, Denver, and Atlanta saw increases from December of 11.5%, 4.6%, and 2.4% respectively. Our report can be found here: NV Endorsement 2022_01.

HUD’s December Endorsement Snapshot Report was just released on its website. Fairway finished calendar 2021 with 1,684 loans sponsored by another party, South River Mortgage was second with 1,594 units, and Ennkar was third with 965.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:

    *Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months

    *WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans

    *Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.

HMBS January 2022: New Year Continues Blizzard of New Issuance

February 1st, 2022

HMBS issuers continued their torrid pace to start the New Year. January saw nearly $1.4 billion in new HMBS, setting a record for new original loan pools for the fourth month in row. Refinancing activity continued to be strong.

January’s production of original new loan pools was a record $1.18 billion, edging December’s $1.14 billion, November’s $1.08 billion and October’s $1.07 billion. Approximately $552 million in original new loan pools were issued in January 2021.

A new issuer has appeared: Mortgage Assets Management, LLC (“MAM”), replacing Reverse Mortgage Solutions, from whom MAM acquired HMBS assets last year. MAM issued 3 tail pools in January.

91 pools were issued in December: 55 first-participation or original pools, and 36 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 $185 million, within the typical range.

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

New View Advisors and Recursion Reverse Mortgage Prepayment Indices – December 2021

January 11th, 2022

New View Advisors and Recursion December 2021 expanded HECM reverse mortgage prepayment indices can be found here: New View Advisors Recursion Cohort Speeds 12_2021. The indices are derived from underlying HECM data in HMBS made public by Ginnie Mae, as well as private sources. This new expanded set of prepayment data is calculated using dollar principal balance, not unit count.

The enhanced data set shows current trends in prepayment activity by product type and Principal Limit Factors (PLFs), and for current 12-month LIBOR PLFs by Expected Rate. HECM loans with higher Expected Rates originated in the year or so prior to the precipitous fall in interest rates brought on by the pandemic are experiencing higher prepayment rates. Therefore, we segregate indices for recent production 12-month LIBOR PLFs into Expected Rates greater than 4% and Expected Rates less than or equal to 4%.

Prepayment speeds are expressed as annualized percentages in three categories: Total Payoffs, Payoffs Other Than Assignments, and Payoffs from Assignment. For each category, we calculate the 1-month, 3-month, 6-month and 12-month CPR, or annual rate of prepayment.

For HMBS pools backed by adjustable rate HECMs using the Constant Maturity Treasury (CMT) index, prepayment speeds will continue to populate as more of these HMBS are issued.

HMBS December 2021 Part II: Refinancing Is the Holiday Guest That Won’t Leave

January 11th, 2022

Outstanding HMBS rose to an all-time high of $57.1 billion in December 2021 as record issuance outweighed another big, refinance-driven month of payoffs.

Meanwhile, extraordinary levels of both issuance and HECM loan payoffs continued. Fueled by refinancing, HMBS payoffs exceeded $1 billion for the tenth month in a row. Outstanding HMBS rose $310 million despite these near-record payoffs. As we predicted, December’s data is a disappointment for HMBS investors hoping for a prepayment slowdown. While falling short of November’s record payoffs, December came close in both dollar amount and speed: $1.28 billion, representing a 24% annual payoff rate. Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases were just $218 million, less than 18% of the total for the first time ever. Will rising interest rates finally allow investors to show their unwanted guest the door? For now, refis seem determined to stay through the New Year’s Eve party.

As we noted last week, American Advisors Group sold most of its HMBS issuance portfolio to Reverse Mortgage Funding, and Mr. Cooper Group sold its HMBS portfolio to Mortgage Assets Management, LLC (MAM). The resulting consolidation leaves the top five issuers accounting for more than 93% of all outstanding HMBS.

According to Ginnie Mae data, AAG was listed in October as the issuer of record for 1,529 HMBS pools totaling $13.1 billion. At yearend, AAG is listed for just 55 pools totaling $1.6 billion. Reverse Mortgage Funding is now the issuer of record for over 3,800 pools totaling $23.5 billion, more than 41% of all outstanding HMBS. The December month end Ginnie Mae data release reflects the Mr. Cooper/MAM sale, removing Mr. Cooper from the HMBS issuance ranks.

In these strategic transactions, the purchasing issuer pays the selling issuer the present value of the issuer’s uncertificated position, which is the difference between future HECM cash flow and future HMBS cash flow. The buyer becomes the issuer for the purchased HMBS pools, benefiting from the excess spread between the HECM interest rate and the HMBS pass-through rate, and any premiums from future tail issuance. Of course, the buyer also assumes the liabilities of an HMBS issuer: advancing Mortgage Insurance Premium (MIP), borrower draws, realized losses from claims, and many others.

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

HECM Endorsement Analytics – December 2021

January 7th, 2022

December finished with a record monthly HECM endorsement count for 2021 of 5,218 loans, bringing the total annual endorsement count to 53,020 units, exceeding by 18.7% the 44,661 HECMs endorsed in 2020. AAG, RMF and FAR accounted for 52.3% of all HECMs endorsed in 2021, slightly higher than the 50.7% seen in 2020. Our report can be found here: NV Endorsement 2021_12.

HUD’s November Endorsement Snapshot Report was just released on its website. “HECM for Refinance” remains at more than 50% of all HECMs endorsed in the month.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of our endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders.

The WBWFW report includes:

–Top Originators – a ranking by original HECM UPB of all lenders over the last twelve months
–WBWFW – an alphabetical cross-reference between every lender and the HMBS issuer that securitizes its loans
–Top 100 Trends – a breakdown of loan sales by month, by Top-100 lender, by HMBS issuer.

Edited samples from this month’s WBWFW report are at the end of our endorsement writeup. These reports together provide accurate insight for sales and marketing teams to learn just who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis alone can show.