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

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    • HECM Endorsements are on the road to being back to less than 4K a month volume. More simply 2004 to 2005 levels. Clearly we should maybe know that this was likely the conversation prior to Financial Assessment…”How can we get back to the HECM volume that they were comfortable with”. Otherwise would this make sense? And 10 years ago Wells Fargo and B.O.A. were in the marketplace….So HUD is really saying “We aren’t really supporting this programs growth”.

      • JD,

        This is nonsense.

        HUD just released its FHA Production Report for October. We have our first confirmed sign of recovery. Not only were case number assignments up over 7,000 for the first month since April but more importantly we see two months of increase when total case numbers assigned for each moth exceeded 6,000, forming the start of a trend. There is now a glimmer of the beginning of an endorsement recovery in the first calendar quarter of 2016.

        So while a picture of gloom and doom may return over the next twelve months in part because of interest rates, right now, a main indicator of recovery, case numbers assigned during a month, is saying something different.

        I would rather stick with verifiable facts over predictions.

      • Love the logic of calling out anyone saying anything you don’t agree with as “Nonsense”. So kind of you. Okay Sir..Every statement that confirms the FHA have been looking to be “less active in residential lending” would be available for you to go online and do your own research. Enjoy your New Year.

      • JD,

        It is what you said in your first response above that is nonsense. For example, December 2015 endorsements were 4,233.

        Your second response is right on point. HUD does not want a reverse mortgage market where their insured loans are virtually the only reverse mortgages being originated. For at least the last decade we have been hearing this. Most FHA leaders have talked about wanting a minor role in our industry.

        It seems far too many in the industry are pessimistic stating things that have little or no basis in industry stats.

        Many consider me pessimistic because I at least look at the numbers before agreeing that this next fiscal year the industry will have a hundred thousand endorsements or in a few years the market will essentially be a proprietary one where HECMs are 20% or less of annual originations. Yet it is hard to believe that HECM endorsements will be less than 43,132 endorsements for fiscal 2016.

        By the way, I was here ten years ago and Bank of America was not originating HECMs 10 years ago but Wells was. This is why I prefer sticking as much as possible to facts.

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