Ginnie Mae Reverse Mortgage Issuance Sees Slow Start to 2016

Just as endorsements for Home Equity Conversion Mortgages (HECMs) began 2016 with a sluggish start, January carried a similar tale for HECM mortgage backed securities (HMBS) issuers, according to the latest market commentary from New View Advisors.

HMBS issues began 2016 by issuing only $651 million in new HMBS during January, down from December’s $685 million and January 2015’s $712 million, notes New View Advisors, which complies its HMBS data from publicly available Ginnie Mae data as well as private sources.

January’s issuance, which included $468 million in original loan pools—the lowest since September 2014—and tail issuance of $182 million, reflects the “new normal” of the HECM program post-Financial Assessment, writes New View Advisors. In total, 96 pools were issued in January, consisting of 45 original issuances and 51 tail pools.

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Original HMBS pools are created when a pool of FHA-insured HECMs is securitized for the first time, whereas tail HMBS issuances are HMBS pools created from the uncertificated portions of previously securitized HECMs. Since newly originated loans usually comprise a large majority of HMBS issuance in any given month, New View Advisors says HMBS issuance is a good barometer of recent HECM production.

Fixed-rate HMBS accounted for 16% of January’s issuance, compared to 19% for all of 2015, and 32% in 2014. 

Also during January, total outstanding HMBS increased to about $53.4 billion, despite payoffs exceeding new issuance for the second consecutive month.

“We estimate that this relatively small $120 million increase is composed of approximately $163 million in negative amortization, plus the $651 million in new issuance, minus $694 million in payoffs,” writes New View Advisors. “Payoffs increased last year, driven primarily by put-backs to HUD of seasoned HECM loans whose loan balances have reached 98% of their Maximum Claim Amount.”

Read the New View Advisors commentary.

Written by Jason Oliva

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  • We will see even larger payoff amounts until around 2020 due to assignments of fixed rate Standards. Their balances due are quickly reaching 98% of their related MCAs (Maximum Claim Amounts). Until recent years, assignments have been a relative low percentage of HECMs still outstanding.

    New View is absolutely correct to stress that issuance amounts are good indicators of how well HECM originations are doing. The problem with that position is that until 2009, Fannie Mae was the principal purchaser of all HECMs. So historically when analyzing Ginnie Mae issuances all we can historically discuss are a portion of the endorsements accounted for in the MMI Fund.

    In the age of 50,000 to 70,000 in annual endorsements, It is expected that tails will only grow in importance to lenders over the next decade.

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