Reverse Mortgage Securities Hit Record-Smashing November

Issuance of Ginnie Mae HECM mortgage-backed securities (HMBS) had a record-setting November with issuers creating approximately $1.232 billion in new HMBS pools during the month, according to the latest New View Advisors commentary.

November’s total marked the largest month of HMBS issuance since February 2010, according to New View Advisors, whose commentary is compiled from publicly available Ginnie Mae data as well as private sources. Driven by HMBS backed by seasoned HECM loans, New View Advisors noted November also saw a “record-smashing” tail issuance of $660 million.

In total, 113 pools were issued, consisting of 51 original issuances and 62 tail pools. Original HMBS pools are created when a pool of Federal Housing Administration-insured HECMs is securitized for the first time, whereas tail HMBS issuances are HMBS pools created from the uncertificated portions of previously securitized HECMs.

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In another highlight for November, Wells Fargo made its second month of HMBS issuance since June 2012, issuing over $462 million. Without the Wells Fargo pools, and other issues backed by seasoned HECM loans, HMBS issuance totaled only about $647 million, according to New View Advisors.

For 2015 year-to-date, HMBS issuance is averaging just over $797 million per month, which New View Advisors indicates is “well above” 2014’s monthly average of $550 million.

Meanwhile, total outstanding HMBS is about $53.3 billion, up from approximately $52.6 billion at the end of October.

“We estimate that this increase is composed of approximately $160 million in negative amortization, plus the $1.232 billion in new issuance, minus about $653 million in payoffs,” New View Advisors writes in its commentary. “Without the seasoned pools, HMBS float would have increased by less than $160 million. Payoff amounts usually increase each month, so total HMBS float could soon shrink for the first time.”

Read the New View Advisors commentary.

Written by Jason Oliva