HREMIC issuance reached the third highest annual volume in full-year 2014, but remained “far off” from its record year, according to the latest HREMIC rankings from New View Advisors based on publicly available Ginnie Mae data.
Five different sponsors underwrote 25 transactions, totaling $5.05 billion in HREMIC issuance to close out 2014.
Bank of America Merrill Lynch remained the top issuer during the year, commanding a 39% market share as it issued approximately $1.96 billion of HREMICs. Life-to-date, the bank has issued 47% of all HREMICs, according to New View’s commentary.
Royal Bank of Scotland, the second highest issuer of the year, recorded six issuances totaling approximately $1.46 billion at a 29% market share, while Nomura issued five HREMICs totaling $855.7 million to grasp 17% of the total market.
Stifel and Credit Suisse—a new HREMIC issuer as of November—issued $472.4 million and $294.9 million, respectively. The three transactions made by Stifel during the year represented a total market share of 9%, while Credit Suisse’s single issuance represented 6%.
The final $5.05 billion tally among all five sponsors for 2014 surpassed 2013’s totals by just under $100 million, New View notes, but was substantially lower than the record year for HREMIC issuance in 2012 when $6 billion was issued.
HREMIC collateral consists of HECM mortgage-backed securities (HMBS), which are Ginnie Mae guaranteed “pass-through” securities backed by pools of participations of Federal Housing Administration-insured Home Equity Conversion Mortgages.
“This double layer of government guarantee, combined with the relatively high coupon and favorable prepayment patterns of the underlying loans, results in very favorable execution, even when compared to other Ginnie Mae ‘forward mortgage’ securities,” writes New View Advisors.
As of November, the total HMBS tally was $5.4 billion year-to-date in 2014.
Written by Jason Oliva