Reverse Mortgage Securities Issuance Continues Year-over-Year Decline

Reverse mortgage securities issuance fell below $500 million in September—just one of four monthly tallies over the last five years to fall to such a level.

The monthly total for September was $498 million in issuance of Home Equity Conversion Mortgage-backed securities (HMBS), according to analysis conducted by financial services firm New View Advisors.

“Newly originated loans comprise a large majority of HMBS issuance in any given month. As a result, HMBS issuance is a good barometer of recent HECM production,” New View notes.

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According to that measure, volume is still down substantially versus its peak, and recent years of production.

The $498 million figure for September compares with $662 million in September 2013. On an average basis, 2014 is seeing an average of $517 million in issuance per month versus an average $800 million monthly in 2013.

The market is trending down, too, in terms of prepayment speeds and total HMBS outstanding.

“If issuance and interest rates stay low, overall HMBS outstanding may decline for the first time,” New View writes.

View the full analysis and commentary from New View Advisors.

Editor’s note: A previous version of this article incorrectly stated the average HMBS issuance for 2014 as $662 million per month. The actual figure is $517 per month. RMD regrets the error. 

Written by Elizabeth Ecker