HMBS November 2016: Give Thanks for Tail Issuance

December 16th, 2016

HMBS issuers created 108 pools in November, down from October due to the lack of seasoned pool issuance. Production of original new loan pools was $504 million, up from October’s $487 million and generally in line with previous months this year. Issuance totaled approximately $718 million in November, the 4th lowest monthly dollar volume this year, down from October’s total of $832 million. The pools divided into 53 original pools and 55 tail pools.

Original pools are those HMBS pools backed by the first participation in a previously uncertificated HECM loan. Tail HMBS issuances are HMBS pools consisting of subsequent participations. In other words, tail pools are created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance. October’s tail issuance was about $214 million, the third highest monthly total this year.

Total outstanding HMBS ticked up to just over $55 billion, an increase of only $44 million from October. We estimate that November HMBS was composed of approximately $171 million in negative amortization, plus the $718 million in new issuance, minus about $845 million in payoffs. Payoffs have exceeded new issuance in 5 of the last 6 months. Payoffs figure continue to climb as more seasoned HECM loans liquidate or reach 98% of their Maximum Claim Amount.

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

HMBS October 2016: No October Surprise

November 17th, 2016

HMBS issuers created 100 pools in October, keeping pace with September and again aided by seasoned pool issuance. Production of original new loan pools fell to $487 million, down sharply from September’s $624 million but in line with the $467 million issued in August. Issuance totaled approximately $832 million in October, the fourth highest monthly dollar volume this year, down just slightly from the September’s $836 million tally. The pool tally divided into 47 original pools and 53 tail pools. October’s HMBS issuance included two highly seasoned original pools totaling $136 million.

Original pools are those HMBS pools backed by the first participation in a previously uncertificated HECM loan. Tail HMBS issuances are HMBS pools consisting of subsequent participations. In other words, tail pools are created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance. October’s tail issuance was about $209 million, typical of this year’s production.

Total outstanding HMBS ticked up to just under $55 billion, up about $111 million from September. We estimate that October HMBS was composed of approximately $171 million in negative amortization, plus the $832 million in new issuance, minus a record $891 million in payoffs. Payoffs have exceeded new issuance in 4 of the last 5 months. Payoffs continue to climb as more seasoned HECM loans liquidate or reach 98% of their Maximum Claim Amount.

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

HMBS Issuer Rankings 2016Q3 – RMF Squeaks Past AAG to Capture the Crown

October 21st, 2016

RMF has overtaken AAG as #1 HMBS issuer for the first nine months of 2016, issuing $1.519 billion of securities for a 22% market share, just $12 million more than AAG’s $1.507 billion and 21.8% market share. AAG had been the leading HMBS issuer since 2015Q2. RMF first issued HMBS in 2014Q1. Finance of America Reverse, Liberty Home Equity, now issuing HMBS as Ocwen Loan Servicing, and Live Well Financial round out the top five issuers. The Money House is the newest HMBS entrant, bringing the total number of issuers to a record 15. Finance of America Reverse issued $1.086 billion for a 15.7% market share, Liberty was fourth with $815.8 million and an 11.8% market share, and Live Well was fifth with $648.4 million issued for a 9.4% market share. The top five issuers accounted for 80.6% of all issuance, down slightly from last quarter’s 81.8%.

Despite the much-reported slowdown in HECM endorsements, HMBS issuance remains robust, aided by growth in tail issuance and highly seasoned pools. As earlier reported, September new original HMBS issuance was up 34% over August. Continued strength in home price appreciation and capital markets execution also help the industry maintain volume in the face of increased mortgage lending scrutiny and regulatory oversight, and ongoing HECM program changes such as financial assessment. Issuance volume totaled $6.922 billion for the first nine months of 2016, $179 million more than 2015Q3’s $6.743 billion. 2010 was the record year for HMBS with $10.7 billion of securities issued.

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

hmbs-2016q3

HMBS September 2016: Fall Harvest is Bumper Crop of New Collateral and Record Number of Pools

October 19th, 2016

HMBS issuers created a record number 119 pools in September, this time driven by new HECM loans, not seasoned collateral or tail issuance of new balances from old loans. Production of original new loan pools increased to an impressive $623 million, up from $467 million in August. Issuance totaled approximately $836 million in September, the third highest monthly dollar volume this year. September’s HMBS issuance total decreased 16% from August’s $996 million, but August’s high totals were augmented by $321 million of new pools backed by very seasoned loans. New original and unseasoned pool production rose 34% from August 2016, and total issuance was up 23% from September 2015’s $680 million. The record pools tally divided into 63 original pools and 56 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.   The original pool totals for September are a breakout from the typical post-Financial Assessment range of $400 – $500 million per month. September’s tail issuance was typical for HMBS tail issuance in 2016. No original pools backed by highly seasoned HECM loans were issued in September.

Tail HMBS issuances are HMBS pools created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance. Tail Issuance strengthened to about $212 million, typical of this year’s production.

Total outstanding HMBS ticked up to $54.9 billion, up about $157 million from August. We estimate that September HMBS was composed of approximately $170 million in negative amortization, plus the $836 million in new issuance, minus a record $850 million in payoffs. Payoffs figure continue to climb as more seasoned HECM loans liquidate or reach 98% of their Maximum Claim Amount.

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

HREMIC Issuance 2016Q3: On Pace For Record Volume (Again)

October 3rd, 2016

HREMIC issuance for the first 9 months of 2016 was nearly $7.7 billion, surpassing the first 9 months of 2015’s $6.5 billion, a previous record. The industry remains on pace to set its second consecutive annual issuance record. There have been 21 transactions underwritten by five sponsors, Nomura, Bank of America Merrill Lynch, Barclays, RBC, and Citicorp. Nomura remains the #1 issuer, with $4.5 billion, almost half their life-to-date issuance of $9.2 billion. Bank of America Merrill Lynch was second with $2.7 billion. Life-to-date BAML has issued $17.2 billion of HREMICs, for a 41% market share. Nomura has issued 22% of all HREMICs, and Barclays 14%. This is the first HREMIC transaction for Citicorp, bringing the number of current HREMIC issuers back to five for the first time since 2014.

Approximately 77% of outstanding HMBS securities have been resecuritized into HREMICs, up from 73% at the end of 2016Q2. A stronger bid for the Interest-Only HREMIC classes emerged last year, and the seasoned HMBS pools we’ve referenced in past blogs are also contributing to the HREMIC volume uptick. The HREMIC structure, which allows issuers to create bond classes such as these “IO” securities, is increasingly the most profitable option.

HREMIC collateral consists of HMBS, which are Ginnie Mae guaranteed pass-through securities. HMBS are backed by pools of participations of HECMs, which are FHA-insured reverse mortgages. This double layer of government guarantee, combined with the relatively high coupon and favorable prepayment patterns of the underlying loans, results in very favorable execution, even when compared to other Ginnie Mae “forward mortgage” securities.

New View Advisors compiled these rankings from publicly available Ginnie Mae data.hremic-issuer-rankings-2016q3

Summer BBQ With Seasoning: August HMBS Issuance Soars With Old Collateral

September 22nd, 2016

HMBS issuers created approximately $996 million in new HMBS pools during August 2016, the highest total this year, but with original issuance totals typical of the post-Financial Assessment HECM origination market. Last month’s HMBS issuance total increased 41% from July’s $704 million, and 36% from August 2015’s $730 million. Issuers sold 96 pools in August 2016, divided into 50 original pools and 46 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 decreased to $467 million from $497 million in July. However, $321 million of original pools backed by highly seasoned HECM loans were issued, resulting in the highest monthly HMBS issuance total so far this year. The largest pool was backed by HECM loans averaging over ten years old.

Total outstanding HMBS ticked up to $54.7 billion, up $325 million from July. We estimate that August HMBS was composed of approximately $169 million in negative amortization, plus the $996 million in new issuance, minus a record $839 million in payoffs. Payoffs figure to climb still higher as more seasoned HECM loans liquidate or reach 98% of their Maximum Claim Amount.

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 Issuance strengthened to about $209 million, typical of this year’s production. 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.

Hold the Fireworks: Flat Issuance and Supply Mark July HMBS

August 14th, 2016

HMBS issuers created approximately $704 million in new HMBS pools during July 2016, with issuance totals typical of the post-Financial Assessment HECM origination market. Last month’s HMBS issuance total increased slightly from June’s $694 million total but fell well short of July 2015’s $809 million. Issuers sold 101 pools in July 2016, divided into 49 original pools and 52 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 increased to $497 million. No seasoned original pools were issued.

Total outstanding HMBS ticked up to $54.4 billion, up only $77 million from June, the smallest increase in recent years. We estimate that July HMBS was composed of approximately $169 million in negative amortization, plus the $704 million in new issuance, minus a hefty $798 million in payoffs. Payoffs figure to climb still higher as more seasoned HECM loans liquidate or reach their 98% of Maximum Claim Amount threshold.

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 Issuance strengthened to about $207 million, typical of this year’s production. 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.

No June Gloom: HMBS Issuance and Supply Remain Steady

July 17th, 2016

HMBS issuers created approximately $694 million in new HMBS pools during June 2016, with issuance totals typical of the post-Financial Assessment HECM origination market. Last month’s HMBS issuance total declined from May’s $857 million total and also June 2015’s $845 million. May’s total was bolstered by highly seasoned original issuance, and last June’s HMBS numbers were inflated by the pre-FA origination rush. Issuers sold 104 pools in June 2016, divided into 49 original pools and 55 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 matched last month’s $449 million tally. No seasoned original pools were issued.

Total outstanding HMBS remains at about $54.3 billion, up only $29 million from May, the smallest increase in recent years. We estimate that June HMBS was composed of approximately $169 million in negative amortization, plus the $694 million in new issuance, minus a record $834 million in payoffs. Payoffs figure to climb still higher as more seasoned HECM loans liquidate or reach the 98% of Maximum Claim Amount threshold.

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 Issuance strengthened to about $244 million, up from May’s total of $211 million.  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.

HMBS Issuer Rankings 2016Q2 – AAG Remains the Leader

July 7th, 2016

AAG stays as #1 HMBS Issuer for the first six months of 2016, with Reverse Mortgage Funding and Finance of America Reverse in second and third places, respectively. Liberty Home Equity, now issuing HMBS as Ocwen Loan Servicing, and Live Well Financial round out the top five issuers. No change in ranking order occurred this quarter although The Money Source is a new HMBS issuer at #11, bringing the total number of issuers back to 14. AAG issued $955.2 million of securities for a 21.8% market share. RMF closed ranks by issuing $931.3 million for a 21.2% market share, just $24 million behind AAG. Finance of America Reverse issued $716.8 million for a 16.3% market share, Liberty was fourth with $521.2 million and an 11.9% market share, and Live Well was fifth with $463.5 million issued for a 10.6% market share. The top five issuers accounted for 81.8% of all issuance, up slightly from last quarter’s 79.8%.

Despite the much-reported slowdown in HECM endorsements, HMBS issuance remains robust, aided by growth in tail issuance and highly seasoned pools. Continued strength in home price appreciation and capital markets execution also help the industry maintain volume in the face of increased mortgage lending scrutiny and regulatory oversight, and ongoing HECM program changes such as financial assessment. Issuance volume totaled $4.386 billion for the first half of 2016, only $137 million less than 2015Q2’s $4.523 billion. 2010 was the record year for HMBS with $10.7 billion of securities issued.

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

 

 

HREMIC Issuance 2016Q2: Nomura’s Run – and Increased Issuance Activity – Continues

July 6th, 2016

HREMIC issuance for the first 6 months of 2016 was $5.4 billion, surpassing the first 6 months of 2015’s $4.3 billion, a previous high water mark. The industry is on pace to set its second consecutive annual issuance record. There were 14 transactions underwritten by four sponsors, Nomura, Bank of America Merrill Lynch, Barclays, and Royal Bank of Canada. Nomura remains the #1 issuer, with $3.3 billion, nearly equaling their 2015 full year total of $3.4 billion. Bank of America Merrill Lynch was second with $1.8 billion. Life-to-date BAML has issued 41% of all HREMICs, Nomura 20%, and Barclays 15%. This is the first HREMIC transaction for RBC.

Approximately 73% of outstanding HMBS securities have been resecuritized into HREMICs, up from 64% at the end of 2015. A stronger bid for the Interest-Only HREMIC classes emerged last year, and the seasoned HMBS pools we’ve referenced in past blogs are also contributing to the HREMIC volume uptick. The HREMIC structure, which allows issuers to create bond classes such as these “IO” securities, is increasingly the most profitable option.

HREMIC collateral consists of HMBS, which are Ginnie Mae guaranteed pass-through securities. HMBS are backed by pools of participations of HECMs, which are FHA-insured reverse mortgages. This double layer of government guarantee, combined with the relatively high coupon and favorable prepayment patterns of the underlying loans, results in very favorable execution, even when compared to other Ginnie Mae “forward mortgage” securities.

New View Advisors compiled these rankings from publicly available Ginnie Mae data.