HMBS issuers created $874 million in new HMBS pools during May 2015, the largest HMBS issuance since November 2013, up from $798 million in April, and substantially higher than May 2014’s $582 million. 105 pools were issued, consisting of 62 original issuances and 43 tail pools. May’s higher totals were driven by Reverse Mortgage Funding, LLC’s issuance of 3 new pools backed by highly seasoned CMT loans totaling $121 million. Thus far in 2015, HMBS issuance is averaging just over $736 million per month, well above 2014’s $550 million monthly average.
As we noted last month, FHA’s new Financial Assessment requirements for newly originated HECM loans will certainly reduce new loan supply, at least in the short run. Given the lag between loan origination and securitization, it will take a few months before we know the full impact.
Total outstanding HMBS is about $51.4 billion, up from $50.9 billion at the end of April. We estimate this increase is composed of approximately $160 million in negative amortization, plus the $874 million in new issuance, minus about $625 million in payoffs. If monthly issuance falls back below $500 million, total HMBS outstanding could shrink for the first time.
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 accounted for about $150 million, about 17% of May’s total. 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.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.