The HMBS new issue market showed another sharp decrease in July. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $450 million, $47 million lower than June’s $497 million and $76 million below May’s $526 million. 80 pools were issued in July – six fewer than both June and May. HMBS Issuance remains near historical lows, comparing monthly issuance dating back to 2010.
Ginnie Mae circulated a Term Sheet for its proposed “HMBS 2.0” program, whereby loans that have UPBs in excess of 98% of Maximum Claim Amount can be pooled. Once implemented, HMBS 2.0 should increase HMBS issuance substantially by financing most mandatory buyouts, which were just under $500 million last month according to Recursion.
FAR was the top issuer again in July with $139 million – $20 million less than June’s $159 million. Issuance from Longbridge decreased by $4 million to $106 million. PHH and Mutual of Omaha issued $98 million and $63 million respectively. Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.
HMBS issuance set a record in 2022, with nearly $14 billion issued. Total issuance for 2023 was approximately $6.5 billion. 2024 total issuance through July totals $3.3 billion – $396 million lower than at this time last year and $6.4 billion lower than at this time in 2022.
July’s original (first participation) production of $294 million was $37 million lower than June’s $331 million and July 2023’s $336 million.
The 80 pools issued in July consisted of 20 first-participation or original pools, 56 tail pools and 4 pools which include both first participations and tails. Original pools are those HMBS pools backed by first participations in previously uncertificated HECM loans. Tail HMBS issuances are HMBS pools consisting of subsequent participations. Tails are not from new loans, but they do represent new amounts lent. Last month’s tail pool issuance totaled $154 million, below the typical range.
Notable in the July HMBS issuance data are 27 pools with aggregate pool size less than $1 million. Issuers are taking advantage of Ginnie Mae’s provision to issue pools as small as $250,000. This represents $17.9 million of UPB that may not otherwise have been issued in July. Ginnie Mae issued APM 23-11 last September, which allows participations from the same loan to be pooled more than once in the same month. The aggregate of participations pooled in July for which more than one participation from the same loan was pooled is $60.8 million, of which $1.3 million were first participations.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.
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