The New Year began much like the previous two years for HECM Mortgage-Backed Securities (“HMBS”). Issuance in January totaled $588 million, $13 million higher than December’s $575 million. 85 pools were issued in January, ten more than December. This continues a trend in which HMBS issuance is range bound, now at a very low level, barely half of the $1.0 billion per month average during the refinance boom of 2020-2022, and also significantly below the $700 million+ average of 2012-2019.
FAR was the top issuer again in January with $160 million, a decrease of $24 million from December. Issuance from Longbridge was steady at $139 million, and PHH took third with $119 million, a $23 million increase from last month. Mutual of Omaha issuance decreased slightly to $105 million. Ginnie Mae/RMF (aka “Issuer 42”) again issued no HMBS pools.
January’s original (first participation) production of approximately $406 million was $17 million higher than December’s production of $389 million. November and October original production totaled $412 million and $345 million, respectively.
As mentioned last month, full year 2024 HMBS issuance volume totaled $6.01 billion – $439 million lower than 2023 and $7.9 billion lower than 2022’s record $14 billion issuance tally. 2024 was the lowest HMBS issuance year since the program’s infancy in 2008. Subtracting tail issuance, 2024 HMBS new origination volume totaled just $3.95 billion.
Ginnie Mae circulated on November 25th of last year the Final Term Sheet for its “HMBS 2.0” program, whereby certain non-active loans that have UPBs in excess of 98% of Maximum Claim Amount can be pooled. Once implemented, HMBS 2.0 will increase HMBS issuance substantially by financing most mandatory buyouts, which have averaged $427 million per month for the last 12 months, according to Recursion. There is no timeline yet for the program’s launch.
The 85 pools issued in January consisted of 26 first-participation or original pools, and 59 tail pools. 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 $183 million compared to December’s $185 million.
Notable in last month’s 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 $16.1 million of UPB that may not otherwise have been issued in January. In addition, Ginnie Mae issued APM 23-11 in November 2023 which allows participations from the same loan to be pooled more than once in the same month.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.
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