The HMBS new issue market rebounded quite a bit in August. HECM Mortgage-Backed Securities (“HMBS”) issuance totaled $494 million, $44 million higher than July’s $450 million and just $3 million below June’s $497 million. 77 pools were issued in August, three fewer than July. Despite the bump up, HMBS Issuance remains near historical lows, comparing monthly issuance dating back to 2010.
Ginnie Mae circulated for comment June 27th 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 over $400 million last month according to Recursion.
FAR was the top issuer again in August with $166 million – $27 million more than July’s $139 million. Issuance from Longbridge increased by $14 million to $120 million. PHH and Mutual of Omaha issued $80 million and $73 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 August totals $3.8 billion – $474 million lower than at this time last year and $6.9 billion lower than at this time in 2022.
August’s original (first participation) production of $336 million was $42 million higher than July’s $294 million and $5 million higher than June’s $331 million. Included in August’s first participation numbers is a $6.3 million pool of seasoned loans issued by Mortgage Assets Management.
The 77 pools issued in August consisted of 23 first-participation or original pools, 53 tail pools and one pool 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 $158 million, below the typical range.
Notable in the August HMBS issuance data are 18 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 $10.1 million of UPB that may not otherwise have been issued in August. 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 August for which more than one participation from the same loan was pooled is $59.3 million, of which $2.6 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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