HMBS issuers created only $510.1 million in new HMBS pools during March 2014, the third lowest total in almost 5 years. This brings first quarter 2014 HMBS issuance to $1.7 billion, the lowest quarterly total in nearly 5 years. By comparison, HMBS issuance totaled $2.5 billion in the fourth quarter 2013 and $2.4 billion in the first quarter of 2013. Q1 2014 had the lowest HMBS issuance since the second quarter of 2009, when the HMBS program was in its infancy. 86 pools were issued last month, consisting of 41 original issuances and 45 tail pools. Original HMBS issuances are the pools 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.
An HMBS pool can be generally be formed with participations of any age, but the healthy premiums of HMBS mean that the vast majority of new HECM production quickly finds its way into HMBS. A single month’s HMBS issuance contains mostly new loans originated in the previous 3 months. As we noted last month, HMBS issuance is a fairly good barometer of recent HECM production.
Beginning with FY 2014, HECM principal limits were cut once again, and FHA imposed new restrictions on the initial draw allowed for certain borrowers. The resulting lower HECM production inevitably reduces HMBS production.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.