Top Issuers of Reverse Mortgage Securities in 2014 Ranked

As predicted, Home Equity Conversion Mortgage (HECM) mortgage-backed securities (HMBS) ended 2014 at a record low not seen since 2008, but the total number of pools issued during the year were a different story altogether, says new commentary from New View Advisors, which also ranks the top issuers of the year.

HMBS issuers sold $6.6 billion in new pools over the course of 2014, closing out the year 31% lower from 2013’s grand total. It was also the lowest full year of issuance since 2008, when HMBS was a fledgling program that had yet to be adopted by most market participants, says New View’s commentary of publicly available Ginnie Mae issuance data.

But while HMBS issuance fell short of last year’s numbers, an all-time record of 1,026 pools were issued in 2014—just three more pools than the previous record set a year ago. 


Tail issuance accounted for 24% of 2014’s issuance, up from its 15% market share last year. 

“This was a bright spot for HMBS issuers as the securitization of additional amounts or ‘tails’ continued to grow,” says New View Advisors. “We expect this trend to continue in 2015.”

Drilling down on a monthly basis, December’s $649 million in HMBS issuance was the third-highest in 2014, during which 91 pools were issued consisting of 50 original issuances and 41 tail pools. 

This was still considerably lower when compared to a year ago, when HMBS issuance totaled $826 million and averaged nearly $800 million per month during 2013. This year, the average was only $552 million per month, according to New View. 

As for the top HMBS issuers of the year, Reverse Mortgage Solutions led all issuers with 144 total pools comprising $1.48 billion, followed by Urban Financial of America with 200 pools totaling $1.19 billion and American Advisors Group coming in third with 116 pools and $1.17 billion, respectively.

Other top issuers for the year included Liberty Home Equity Solutions with 91 pools at approximately $783 million; Live Well Financial with 83 pools and $470.4 million; and Nationstar Mortgage with 172 total pools tallying $452.7 million.

Overall, Ginnie Mae issuance—including both forward and reverse Ginnie Mae I and II securities—is down significantly year-over-year. In 2014, $285 billion was issued through November compared to just over $417 billion last year.

View the commentary from New View Advisors.

Written by Jason Oliva

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  • How can tails not grow? Last fiscal year over 17,000 endorsements came from adjustable rate HECMs. While terminations of those endorsements have started, the majority will not terminate for years. Then for the last 15 plus months, the vast majority of the endorsed HECMs are adjustable rate. Even more pertinent is the impact of the new 60% of principal limit on first year disbursements.

    Tails will become ever more important as HECMs are used in financial planning but have no balances due at closing. Tails can help turn lender net income rise despite anything but robust growth in endorsements. The reason is that those revenues have no commission type costs associated with them.

    In early 2019, the big joke of the industry will be the prior goal of 300,000 endorsements in fiscal 2018. However, unlike HECMs for Purchase (although we will be hearing that H4Ps are the sleeping giant of the industry), lenders will actually be looking for even greater revenue growth from their tails.

    Both brokers and originators will be looking for some kind of compensation from this source in the next few years but it is unlikely that by 2018, there will be any such sharing. But the response will continue to be something like: “HECMs are mortgages, right? They are not life insurance or some other type of insurance product, so forget about residual income from a mortgage product.”

  • No longer can RMS feel safe in its position of first in GNMA issuance. It is also ridiculous that some of the smallest issuers as to dollar amounts issue so many pools. For some smaller size dollar issuers, it is an average of over a new pool every other business day which seems a little ridiculous just looking at the cost of issuance.

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