HECM Endorsement Analytics – February 2020

March 2nd, 2020

HUD’s February 2020 HECM Endorsement Summary Report shows a total of 3,386 endorsements. It is lower than last month’s 3,919, but adjusted for day count a very strong number considering the previous 12 months averaged fewer than 2,900 units. Our summary can be found here: NV Endorsement 2020_02. While HMBS issuance is a more accurate barometer of current HECM originations, endorsement count does provide reasonable long-term trend vectors.

AAG had 691 endorsements, a significant drop from last month’s 1,141 endorsements. Liberty Home Equity Solutions kept its strong pace and endorsed 582 loans, 107 more than last month. Fairway endorsed 150, almost matching its record from Jan 2018. Live Well Financial has finally dropped off the top 15 originators list.

HUD’s January Endorsement Snapshot Report is now published on their website. Liberty Home Equity Solutions sponsored 501 loans originated by another lender. Finance of America Reverse, AAG, and Reverse Mortgage Funding followed with 333, 264, and 263 loans, respectively. Fairway sold 93 loans to another sponsor, followed by Ennkar with 63.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of this endorsement report subscription. The report compiles publicly available Ginnie Mae dollar volume 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 can show.

HMBS February 2020: Low Interest Rates Send Valentine to HMBS Issuers

March 2nd, 2020

HMBS issuance totaled $707 million in February 2020, as lower rates continued to strengthen new production. 81 pools were issued in February, including about $501 million of new unseasoned HECM first participation pools, continuing a strong upward trend in production. There were no highly seasoned new issues. What a difference a year makes: February 2019 marked a five-year low when HMBS issuers sold 82 pools totaling $491 million.

Reverse mortgage lenders weathered a long period of reduced new origination volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of FY2018. However, over the last year new production of HECMs and HMBS has slowly climbed back to its long-term average range of $500 – $600 million.

The HMBS market totaled about $8.3 billion for calendar year 2019, down from $9.6 billion in 2018 and $10.5 billion in 2017. However, securitization of private reverse mortgages is a much bigger factor now. As a result, we estimate that the total issuance of reverse mortgage securities backed by new collateral in 2019 was about the same as 2018.

February’s production of original new loan pools was about $501 million, compared to $550 million in January, $484 million in December, $506 million in November, $426 million in October, $393 million in September, $390 million in August, $321 million in July, and barely $274 million in February 2019. Adjusted for day count, February 2020 continues the strong issuance pace of January 2020.
Last month’s tail pool issuances totaled $206 million, within the range of recent tail issuance.

January issuance divided into 33 First-Participation or Original pools and 48 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 can generate profits for years, helping HMBS issuers during challenging times.

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

HMBS January 2020 Part II: HMBS Float Remains in Equilibrium Just Above $54 Billion

February 11th, 2020

Outstanding HMBS rose by $15 million in January, as lower payoffs were balanced by a strong issuance month, including seasoned new issuance. Payoffs totaled approximately $900 million, down about $25 million from last month. Total outstanding HMBS hovers at $54 billion, an equilibrium in which new issuance and interest roll-up roughly equal payoffs.

In 2019, HMBS posted the lowest annual total in five years. However, low interest rates and now a higher lending limit have boosted production significantly, while Mandatory Buyouts continue to fall. How long this equilibrium will last is the question.

We predicted continuing declines in Mandatory Buyouts, and January was a case in point, with buyout dollar volume at its lowest level in nearly 5 years. “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. From now on, billion-dollar-plus payoff months will be the exception rather than the rule. Many HECM loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout is long gone.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $450 million, falling below 50% for the first time in nearly 5 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.

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

HECM Endorsement Analytics – January 2020

February 3rd, 2020

HUD’s January 2020 HECM Endorsement Summary Report shows 3,919 endorsements, a strong start for the year, though volume may include backlogged pipeline from year-end. Our summary can be found here: NV Endorsement 2020_01. The increase in volume is evenly distributed geographically. Compared to December, the Atlanta field office volume increased 66%, from 452 to 751 units; the Denver field office increased 40%, from 573 to 801 units; the Philadelphia office increased 89% from 380 to 718 units; and the Santa Ana field office saw its unit volume increase 56%, from 1,056 to 1,649 units. Overall, January volume increased 59% from December, and it is the highest monthly endorsement volume since February 2019.

AAG continues to hold its lead with more than 30% of origination volume, or 1,141 endorsements. After Liberty’s uncharacteristically tiny endorsement volume in December, it bounced back with 475 endorsements in January, its strongest performance since February 2018. Reverse Mortgage Funding came in third with 361 endorsements. The top six originators each had market share exceeding 5%, with a combined market share of roughly 67%. The market has consolidated over the last 12 months; one year ago, the top six originators had a combined 62% market share.

HUD just released its December Endorsement Snapshot Report and RMF sponsored 243 loans originated by another lender. Finance of America Reverse and AAG followed with 187 and 160 such loans respectively. Fairway sold 48 loans to another sponsor in December; like other smaller players, Fairway’s production has been in a downward trend over the last 12 months.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) report as part of this endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders. Our 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 2020: Beginnings of a Happy New Year?

February 3rd, 2020

HMBS issuance totaled $760 million in January 2020, as lower rates continued to strengthen new production. 87 pools were issued in January, including about $550 million of new unseasoned HECM first participation pools, continuing a strong upward trend in production. There were no highly seasoned new issues. For comparison, HMBS issuers sold 97 pools totaling $614 million in January 2019.

Reverse mortgage lenders weathered a long period of reduced new origination volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of FY2018. However, over the last year new production of HECMs and HMBS has slowly climbed back to its long-term average range of $500 – $600 million.

The HMBS market totaled about $8.3 billion for calendar year 2019, down from $9.6 billion in 2018 and $10.5 billion in 2017. However, securitization of private reverse mortgages is a much bigger factor now. As a result, we estimate that the total issuance of reverse mortgage securities backed by new collateral in 2019 was about the same as 2018.

New production issuance is in a strong upward trend: January’s production of original new loan pools was about $550 million, compared to $484 million in December, $506 million in November, $426 million in October, $393 million in September, $390 million in August, $321 million in July, and barely $300 million in January 2019. Last month’s tail pool issuances totaled $210 million, within the range of recent tail issuance.

January issuance divided into 40 First-Participation or Original pools and 47 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 can generate profits for years, helping HMBS issuers during challenging times.

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

HMBS December 2019 Part II: Bye Bye (Peak) Buyout

January 10th, 2020

Outstanding HMBS rose $137 million in December, as lower payoffs were balanced by a strong issuance month, including seasoned new issuance. Payoffs totaled just over $950 million, about the same as November. Total outstanding HMBS now stands at just over $54 billion. For now, supply is in equilibrium, with new issuance and interest roll-up roughly equal to payoffs.

The direction of total HMBS float is now hard to predict given further trends. HMBS issuance in the first half of 2019 was the lowest six months of issuance in five years. In 2019, HMBS also posted the lowest annual total in five years. However, low interest rates and now a higher lending limit have boosted production significantly, while Mandatory Buyouts continue to fall. How long can this equilibrium last?

We predicted continuing declines in Mandatory Buyouts and December was a case in point, with buyout dollar volume at its lowest level in nearly 4 years. “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. From now on, billion-dollar-plus payoff months will be the exception rather than the rule. Many HECM loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout is long gone.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $476 million, or 51% of the total, the lowest percentage in almost 5 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.

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

HECM Endorsement Analytics – December 2019

January 8th, 2020

HUD’s December 2019 HECM Endorsement Summary Report shows a total of 2,461 endorsements. Our summary can be found here: NV Endorsement 2019_12 WBWFW. The monthly year-over-year increase is nearly 40%; however, that metric is skewed by muted endorsement activities from December 2018 as a result of last year’s government shutdown. The December 2019 endorsement count is lower than November’s 2,842 and October’s 3,296. As discussed previously, we believe part of the increase in volume in early Q4 can be attributed to lower interest rates. Rates have increased since, and it has likely dampened December endorsement volume.

Most of the top originators have seen endorsement volume declines since October; notably, Liberty Home Equity Solutions only had 2 in December, the first time Liberty had a single digit monthly endorsement count since January 2013. Reverse Mortgage Funding had a strong month with 303 endorsements, the company’s best month since March 2018.

By regions, the Santa Ana field office had 1056 endorsements, a 4% increase over the previous 11-month average. The other field offices however, all had decreases in December. Denver, Atlanta, and Philadelphia had 8%, 20%, and 28% decreases respectively from their previous 11-month averages.

HUD also just released its November 2019 Endorsement Snapshot Report. The report shows that Finance of America Reverse sponsored 322 loans originated by another lender in November, maintaining its lead among sponsors. AAG also had a strong month with 200 sponsored loans in November. Fairway sold 75 loans to another sponsor in November. Fairway’s still the most active seller, but the number of loans sold is significantly lower than the 99 and 103 loans it sold in September and October.

We noted last month that refinanced HECMs have made a come back of late. The November Endorsement Snapshot Report shows there were 391 ‘HECM for Refinance,’ its highest level since April 2018. As a percentage it accounts for over 13% of all HECM endorsements. It is also worth noting that fixed rate HECM endorsements have been dwindling steadily since 2018Q3. For several years prior, fixed rate HECM endorsements averaged 400+ loans per month. Since June 2019, fixed rate HECM endorsements have not exceeded 85 loans per month.

New View Advisors continues to offer its Who Buys What From Whom (WBWFW) analysis as part of this endorsement report subscription. The report compiles publicly available Ginnie Mae data to show which HMBS issuers buy HECMs from which lenders. WBWFW 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 who’s buying what from whom. The dataset is more complete and timely than what endorsement analysis can show.

2019 HMBS Issuer League Tables – No Surprises

January 3rd, 2020

AAG kept its frontrunner HMBS issuer position throughout 2019, ending the year with $1.97 billion of issuance and 24% market share. It’s worth noting AAG’s issuance totals are all new originations and tails, with no highly seasoned pools issued. Longbridge finished in second place with $1.72 billion of issuance and 21% share, including more seasoned HMBS issuance in Q4. RMF stayed in third with $1.50 billion issued and 18% market share, which includes issuance assumed from the Live Well Financial bankruptcy. FAR was fourth with $1.21 billion issued and 14.7% market share, and PHH Mortgage Corp placed fifth with $962 million and 11.7% market share. These five issuers accounted for 89.2% of all issuance, inching closer to the Top-5 concentration high of 91% at year-end 2018. There was no change in rankings order from Q3, and all 14 HMBS issuers were active during the quarter.

2019Q4 saw $2.28 billion of HMBS issued, down slightly from Q3’s $2.33 billion, but on the upward trajectory seen all year. Nonetheless, at $8.26 billion, annual industry volume was off almost 14% from a year ago. Total HMBS issuance in 2018 was $9.58 billion.

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

HMBS December 2019: Stocking Half Full in 2018? Then Hang Two Stockings This Year

January 3rd, 2020

HMBS issuance totaled $908 million in December 2019, as lower rates continued to strengthen new production. 92 pools were issued in December, including about $484 million of new unseasoned HECM first participation pools, maintaining the high monthly total for new production this year. This month’s total was also helped by two large seasoned new issues, including a CMT-indexed pool. For comparison, HMBS issuers sold 95 pools totaling $619 million in December 2018.

Reverse mortgage lenders weathered a long period of reduced new origination volume, primarily due to the new lower PLFs for Home Equity Conversion Mortgages (“HECMs”) in effect since the beginning of FY2018. Yet, with this month’s issuance, the HMBS market totaled about $8.3 billion for calendar year 2019. HMBS issuance totaled $9.6 billion in 2018 and $10.5 billion in 2017. However, securitization of private reverse mortgages was much higher than previous years. As a result, we estimate that the total issuance of reverse mortgage securities backed by new collateral was about the same as 2018.

Some other trends to watch in 2020:

What happens to LIBOR?
The industry relies heavily on the 12-month LIBOR index for its adjustable rate HECMs. LIBOR is scheduled to go away in 2021, and the plan to replace this index is not clear.

What happens to HECM?
HUD has already hinted at further change. Despite significant improvements in HECM performance over the last several years, restrictions on HECM to HECM refinancing and county level MCA limits are on the table. Are lower Principal Limit Factors also looming?

Will private reverse mortgage production surpass HECMs?
Private reverse mortgages, most of them jumbo-sized, now make up more than 25% of new origination by dollar volume. As HECM is cut back and new private products are introduced, can private RMs surpass HECM as the industry’s main product?

December’s production of original new loan pools was about $484 million, compared to $506 million in November, $426 million in October, $393 million in September, $390 million in August, and $321 million in July. Last month’s tail pool issuances totaled $220 million, within the range of recent tail issuance.
December 2019 issuance divided into 33 First-Participation or Original pools and 59 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 can generate profits for years, helping HMBS issuers during challenging times.

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

HMBS November 2019 Part II: HMBS Float in Equilibrium at $54 Billion

December 10th, 2019

Outstanding HMBS fell by $33 million in November, as lower payoffs were balanced by a strong issuance month. Payoffs totaled just under $928 million, the lowest amount in 9 months. Total outstanding HMBS fell to about $53.9 billion, a three-year low, but scarcely different from last month’s total. This is only the second month HMBS float has been less than $54 billion since May 2016.

After months of decline, the direction of total HMBS float is now hard to predict, given further trends. HMBS issuance in the first half of 2019 was the lowest half of issuance in five years. With one month to go, HMBS issuance figures to post the lowest annual total in five years. However, low interest rates and now a higher lending limit have boosted production significantly, while Mandatory Buyouts continue to fall. This month, the float appears to be in equilibrium, but can that last?

We predicted continuing declines in Mandatory Buyouts and November was a case in point with buyouts at their lowest level in over 3 years. “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. From now on, billion-dollar-plus payoff months will be the exception rather than the rule. Many HECM loans continue to reach their buyout threshold, equal to 98% of their Maximum Claim Amount (“MCA”), but Peak Buyout is over.

Our friends at Recursion broke down the prepayment numbers further: the 98% MCA mandatory purchases totaled $517 million, or 56% of the total. This continues a gradual downward trend from the buyout peak in the third quarter of 2018, 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.