HECM Endorsement Analytics – February 2021

March 10th, 2021

2021 February HECM Endorsements came in at 4,066 units. Losing just one business day from January, February endorsements fell 10.4% over last month’s 4,539 units. Despite this drop, the top two lenders expanded their leads: American Advisors Group had 1,374 endorsements versus 1,287 in January, and Finance of America Reverse had 465 endorsements versus 433 in January. The next five lenders all saw decreases in unit count. Reverse Mortgage Funding endorsed 376 loans, 38% fewer than January, though it’s worth pointing out January was an endorsement count high water mark for RMF. Our summary of HUD’s report can be found here: NV Endorsement 2021_02.

HUD’s January Endorsement Snapshot Report is also now available on its website. HECM to HECM refis hit a record 1,651 endorsement in January. With long term interest rates at their highest levels since early 2020, it remains to be seen if rising rates will dampen HECM refinancing, and possibly HECM lending in general.

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 February 2021 Part II: Farewell to LIBOR ARMs

March 9th, 2021

Outstanding HMBS rose by $159 million in February 2021, as issuers rushed to issue new LIBOR pools. February was the last month in which GNMA allowed issuance of HMBS pools backed by first participations of LIBOR-indexed loans. For the time being, the Treasury CMT index replaces LIBOR as the base index for newly originated adjustable-rate HECM loans. Payoffs rose to about $825 million. Total outstanding HMBS is now $56.4 billion, nearly an all-time high and the highest total in two and a half years.

In 2019, HMBS posted its lowest annual issuance total in five years. But in 2020 low interest rates and a higher lending limit boosted production significantly to a near-record $10.6 billion. The industry may struggle to reach the same levels of production in 2021, challenged by higher interest rates.

“Peak Buyout” was an echo of the peak issuance from 2009 through the first half of 2013. Much of this production has already been repurchased by the issuers or repaid by borrowers. Each month fewer and fewer of these peak issuance loans remain, and so fewer HECM loans reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”). Our friends at Recursion broke down the prepayment numbers further: last month’s 98% MCA mandatory purchases totaled $225 million, the lowest total in nearly 7 years. This continues the downward trend from the buyout peak in the third quarter of 2018, which averaged over $750 million in Mandatory Purchases per month. With buyouts at less than one-third their peak level, Peak Buyout is long gone.

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

New View Advisors and Recursion Introduce Reverse Mortgage Prepayment Indices

March 2nd, 2021

New View Advisors and Recursion are introducing a set of expanded HECM reverse mortgage prepayment indices, which can be found here: New View Advisors Recursion Cohort Speeds 01_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. Data presented are for HECMs outstanding as of January 31, 2021, representing 311,364 loans totaling $56.5 billion. Future updates of the indices will be available after the 6th business day of each month.

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 begin to populate as more of these HMBS are issued. Just under $300 million of CMT HMBS are currently outstanding: other than some highly seasoned tail pools, none have been outstanding more than one month.

Please contact us if you’re interested in customized stratification of HECM prepayment speeds by vintage, Expected Rate, Weighted Average Loan Age, or other tailored output.

HMBS February 2021: Issuance Blizzard Ends LIBOR Era

March 1st, 2021

HMBS issuance totaled $872 million in February 2021, as the LIBOR deadline finally arrived. February 2021 was the last month in which Ginnie Mae allowed pooling of new HMBS pools backed by first participations of LIBOR-based HECMs. 92 pools were issued in February; of these, 17 pools totaling $224 million were pools backed by new LIBOR loans.

February also saw strong issuance of HMBS backed by new CMT-indexed loans; 27 pools totaling just under $418 million were issued in this category. Before January 2021 no new first-participation CMT pools had been issued in many years.

A record $10.6 billion in HMBS was issued in 2020, easily beating 2019’s total of $8.3 billion, 2018’s $9.6 billion, and even eclipsing the $10.5 billion set in 2017. 2010 remains the all-time HMBS volume year with $10.8 billion issued, when Principal Limits were high and no borrower financial assessment safeguards had been established. HMBS issuers will be hard pressed to equal last year’s total, but now that the LIBOR deadline has passed, the reverse mortgage picture should soon become clear.

February production of original new loan pools was $693 million, up from January’s $552 million, but significantly down from December’s record $878 million and November’s $765 million. Approximately $501 million in original new loan pools were issued in February 2020.

February issuance divided into 50 first-participation or original pools, and 42 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, FHA mortgage insurance premiums, etc. Last month’s tail pool issuances totaled $180 million, below the typical $200-$250 million range.

Helped by low interest rates, low default rates, and the reemergence of private loans, the reverse mortgage market appears strong. However, this strength could be challenged by economic conditions, rising interest rates and the transition out of LIBOR. The Constant Maturity Treasury “CMT” index is now the only index for new adjustable rate HECM loans and will remain so until transition to another index, likely the Secured Overnight Financing Rate “SOFR,” occurs.

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

HMBS January 2021 Part II: Mad Dash to the LIBOR Exit

February 9th, 2021

Outstanding HMBS rose by about $285 million in January 2021, as issuers rushed to issue new LIBOR pools. After February 2021, GNMA will no longer allow issuance of HMBS pools backed by first participations of LIBOR-indexed HECMs. Payoffs fell significantly to about $790 million. Total outstanding HMBS is now over $56 billion, the highest total in two and a half years.

In 2019, HMBS posted its lowest annual issuance total in five years. But in 2020 low interest rates and a higher lending limit boosted production significantly to a near-record $10.6 billion. The industry may struggle to reach the same levels of production in 2021.

“Peak Buyout” was an echo of the peak issuance from 2009 through the first half of 2013. Much of this production has already been repurchased by the issuers or repaid by borrowers. Each month fewer and fewer of these peak issuance loans remain, and so fewer HECM loans reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”). Our friends at Recursion broke down the prepayment numbers further: las month’s 98% MCA mandatory purchases totaled $252 million, near December 2020’s 6-year low. This continues the downward trend from the buyout peak in the third quarter of 2018, which averaged over $750 million in Mandatory Purchases per month. With buyouts at less than one-third their peak level, Peak Buyout is long gone.

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

HECM Endorsement Analytics – January 2021

February 2nd, 2021

HECM Endorsements had a strong start in 2021; HUD’s HECM Endorsement Summary Report shows 4,539 endorsements in January, an 10.8% increase over December. In 2020, only April had a higher number of endorsements at 5,038. Our summary of the report can be found here: NV Endorsement 2021_01.

A handful of lenders contributed significantly to January’s increase in endorsements, notably Reverse Mortgage Funding and Longbridge Financial, with 603 and 280 endorsements respectively, representing increases of 39% and 47% over December.

Geographically, the west coast continues its domination. Field offices in Los Angeles, Phoenix, Seattle, Santa Ana, and San Francisco each eclipsed 200 endorsements in January. Denver is the only other field office in that category, with 289 endorsements.

HUD’s December Endorsement Snapshot Report shows another big refi month, with 38% of all HECM endorsements categorized as a refinancing. The same report shows that despite the recent uptick in long term treasury rates, HECM interest rates continued to trend lower.

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 2021: LIBOR Hangover After Wild New Year’s Eve Party

February 1st, 2021

HMBS issuance totaled $949 million in January 2021, as issuers began to wrap up securitization of new LIBOR-indexed HECM loans. January 2021 is the next-to-last month in which Ginnie Mae will allow pooling of new HMBS pools backed by first participations of LIBOR-based HECMs. 81 pools were issued in January; 12 pools totaling about $191 million were pools backed by new LIBOR loans.

January also saw the appearance of HMBS backed by new CMT-indexed loans; 19 pools totaling just under $300 million were issued in this category. No new first-participation CMT pools had been issued for many years. January’s total was also helped by a large ($208 million) highly seasoned CMT pool.

A record $10.6 billion in HMBS was issued in 2020, easily beating 2019’s total of $8.3 billion, 2018’s $9.6 billion, even eclipsing the $10.5 billion set in 2017. 2010 remains the all time HMBS volume year with $10.8 billion issued, when Principal Limits were high and no borrower financial assessment safeguards had been established. HMBS issuers will be hard pressed to equal last year’s total, but the picture will not be clear until the LIBOR deadline passes and the LIBOR backlog is cleared.

January production of original new loan pools was $552 million, significantly down from December’s record $878 million, November’s $765 million, and October’s $674 million, and approximately equal to the $550 million issued in January 2020.

January issuance divided into 39 first-participation or original pools, and 42 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, FHA mortgage insurance premiums, etc. Last month’s tail pool issuances totaled $189 million, below the typical $200-$250 million range.

Helped by historically low interest rates, lower default rates, and the reemergence of proprietary loans, the reverse mortgage market appears strong. However, this strength may soon be challenged by economic conditions and the transition out of LIBOR. The Constant Maturity Treasury “CMT” index is now the index for new adjustable rate HECM loans and will remain so until a transition to another index, likely the Secured Overnight Financing Rate, or “SOFR.”

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

HMBS December 2020 Part II: Mad Dash to the LIBOR Exit

January 12th, 2021

Outstanding HMBS rose by $412 million in December 2020, as issuers rushed to issue new LIBOR pools. After February 2021, GNMA will no longer allow issuance of HMBS pools backed by first participations of LIBOR-indexed loans. Payoffs fell slightly to approximately $900 million. Total outstanding HMBS rose again, to just under $56 billion, the highest total in over two years.

In 2019, HMBS posted its lowest annual issuance total in five years. But 2020’s low interest rates and higher lending limit boosted production to a near-record $10.6 billion. The industry may struggle in 2021 to reach similar levels of production.

“Peak Buyout” was an echo of the peak issuance from 2009 through the first half of 2013. Much of this production has already been repurchased by issuers or repaid by borrowers. Each month fewer and fewer of these peak issuance loans remain, so fewer HECM loans reach their 98% Maximum Claim Amount (“MCA”) buyout threshold. Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $230 million, a 6-year low. This continues the downward trend from the buyout peak in the third quarter of 2018, which averaged over $750 million in Mandatory Purchases per month. With buyouts at less than one-third their peak level, Peak Buyout is long gone.

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

HECM Endorsement Analytics – December 2020

January 5th, 2021

HUD’s December 2020 HECM Endorsement Summary Report shows a moderate rebound of endorsement activity to finish the year, our summary of which can be found here: NV Endorsement 2020_12. 4,097 HECM loans were endorsed in December, a 15% increase over November. Endorsements totaled 44,661 units in 2020, compared to 32,472, 41,683, and 55,239 units in 2019, 2018, and 2017 respectively.

The HECM market has become further concentrated between a few large lenders. During 2020, the top four originators accounted for 58.7% of all HECMs, up from 54.4% in 2019. Apart from One Reverse Mortgage, which ceased HECM lending in February, there have been no major shifts in originator rankings.

One notable development for 2020 was the increase in HECMs accounted for as a refinancing. HUD’s November Endorsement Snapshot Report shows refinancings accounting for almost 25% of HECM endorsements. The same metrics for 2019, 2018, and 2017 were 7%, 7%, and 16%, respectively.

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.

2020 Full Year HMBS Issuer League Tables – Consistent AAG Takes the Win

January 4th, 2021

AAG maintained its #1 HMBS issuer ranking to lead all issuers in 2020 with $2.823 billion of issuance and 26.5% market share. This is the second consecutive year AAG has taken the crown. FAR jumped two notches into second place for the year with $1.869 billion issued and 17.55% market share. Longbridge dropped to third, just behind FAR, with $1.865 billion issued and 17.52% market share, and RMF was fourth with $1.822 billion issued and 17.1% market share. PHH Mortgage stayed in fifth for the year, with $1.352 billion and a 12.7% market share. These five issuers continue to account for 91+% of all HMBS issuance. There were 13 active HMBS issuers in 2020.

2020Q4 saw $3.04 billion of HMBS issued, slightly off third quarter’s $3.16 billion but up significantly from second quarter’s $2.35 billion and first quarter’s $2.09 billion. With HMBS capital markets recovered from the Coronavirus pandemic, HECM origination volume up, and a last-minute surge of LIBOR-based HMBS issuance before conversion to CMT, 2020 HMBS volume crossed $10.6 billion, second only to 2010’s $10.8 billion. While the industry got a 12th hour, 2-month reprieve, time will soon tell how Ginnie Mae’s decision to end LIBOR as an index for new HMBS pools backed by first participations will affect volume.

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