HMBS issuers created $518 million in new HMBS pools during August 2014, the third largest monthly HMBS issuance this year, up slightly from last month’s $507 million. 91 pools were issued, consisting of 46 original issuances and 45 tail pools. By comparison, HMBS issuance totaled $744 million in August 2013, and averaged nearly $800 million per month during 2013. Thus far in 2014, HMBS issuance is averaging only $520 million per month.
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 helped, accounting for about $140 million.
Newly originated loans comprise a large majority of HMBS issuance in any given month. As a result, HMBS issuance is a 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. However, beginning August 2014, FHA published a new table that raised principal limits for HECMs at current market interest rates. If interest rates stay low, this may increase HMBS issuance in the remainder of 2014.
Overall Ginnie Mae issuance is down significantly, with $29 billion issued in July 2014, compared to an average of $38 billion per month in FY 2013. However, July’s total represents the fourth consecutive month of increasing Ginnie Mae issuance. These figures include both forward and reverse, Ginnie Mae I and Ginnie Mae II securities.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.