Total HMBS payoffs in October increased from September; 1-mo prepayment speeds were 18.8% per annum compared to September’s 16.9% per annum. Outstanding HMBS decreased by $86.5 million to $57.84 billion – the 11th consecutive decrease and the 19th in the last 21 months.
Finance of America is the issuer of record for $17.5 billion or 30.3% of all outstanding HMBS, having replaced Ginnie Mae as the largest portfolio in May. Along with Longbridge and PHH, the top four issuers of record account for 86% of outstanding HMBS.
“Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 3,976 former RMF pools. About $348 million of Issuer 42’s portfolio paid off in October, but Issuer 42 still accounts for $15.73 billion, or 27% of all outstanding HMBS. Issuer 42 has not issued any tail pools; we estimate Issuer 42 still has an uncertificated position of over $1 billion, that is, the excess of their portfolio’s HECM asset balance over the balance of their HMBS liability.
When a HECM loan balance reaches 98% of its MCA, the HMBS issuer is required to buy the loans out of the HMBS pool, and then assign the loan to HUD if the loan is not in default. This is effectively a prepayment event for the HMBS investor, even though the underlying HECM loan remains outstanding. According to our friends at Recursion, payoffs last month due to Mandatory Purchases were $456 million.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.