The New Menu, With a Little Seasoning, for May HMBS Issuers

HMBS issuers created approximately $857 million in new HMBS pools during May 2016, with a weak tally in original pools once again mitigated by seasoned pool issuance. Last month’s HMBS issuance total improved on April’s $775 million but was down slightly from May 2015’s $874 million. Issuers sold 94 pools, divided into 43 original pools and 51 tail pools. Original pools are those HMBS pools backed by the first participation in a previously uncertificated HECM loan, typically a recently originated HECM loan. Production of original new loan pools remains in a historically low range, tallying only $449 million in May. The two seasoned pools adding to this month’s totals totaled $196 million and were backed by 8-year-old CMT loans and 7-year-old LIBOR loans.

Total outstanding HMBS is about $54.3 billion, up from about $54.0 billion at the end of April. We estimate that this increase is composed of approximately $168 million in negative amortization, plus the $857 million in new issuance, minus $750 million in payoffs.

Original HMBS pools are created when a pool of FHA-insured Home Equity Conversion Mortgages (“HECMs”) is securitized for the first time. Tail HMBS issuances are HMBS pools created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance. Tail Issuances remained strong at about $211 million of May’s total. This appears to be the new issuance range for the industry: New production between $400 – $500 million per month, tail issuance of just above $200 million per month, plus the occasional seasoned loan HMBS securitization.

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

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