Total HMBS payoffs in February increased from January; 1-mo prepayment speeds were 17.3% per annum compared to January’s 16.5% per annum. Outstanding HMBS decreased by $133 million to $57.8 billion – the twentieth decrease in the last 24 months.
Finance of America is the issuer of record for $17.7 billion or 30.7% of all outstanding HMBS, having replaced Ginnie Mae as the largest portfolio in May 2024. Along with Longbridge and PHH, the top four issuers of record continue to account for 90% of outstanding HMBS.
“Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 3,968 former RMF pools. About $332 million of Issuer 42’s portfolio paid off in February, but Issuer 42 still accounts for $14.75 billion, or 26% 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 $461 million. Mandatory Purchases have averaged $422 million, $423 million and $459 million over the last 6 months, 12 months and 24 months, respectively.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.
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