Total HMBS payoffs in July were 0.4% lower than June; the 1-mo prepayment speed for July was 15.4% compared to June’s 15.8%. Outstanding HMBS decreased by $50.7 million to $56.07 billion, the 37th decrease in the last 42 months. The decline in HMBS understates the true story in outstanding HMBS and HECMs because negative amortization of underlying HECM loans mitigates dropping HMBS balances. While HMBS balances declined 1.8% and 3.5% over the last one and two years respectively, loan count dropped 5.9% and 12.0% over those same timeframes. The outstanding HMBS population in July 2021 included 309,910 HECMs; as of July 31st there were 238,188.
“Ginnie Mae – Reverse Mortgage Funding 42” remains as issuer of record for 3,870 former RMF pools. About $231 million of Issuer 42’s portfolio paid off in July, but Issuer 42 still accounts for $10.9 billion, or 19% 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.
Finance of America is now the issuer of record for $23.4 billion or 42% of all outstanding HMBS, having replaced Ginnie Mae as the largest portfolio in 2024. As previously announced, FAR added another $5.14 billion in July from Onity. Along with Longbridge, these three issuers account for 80% of all outstanding HMBS.
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 $340 million. Mandatory Purchases have averaged $414 million over the last 24 months.
New View Advisors compiled this data from publicly available Ginnie Mae data as well as private sources.