Seasoned Reverse Mortgages Drive February HMBS to $769 Million

Last month, issuers of HECM reverse mortgage-backed securities (HMBS) created approximately $769 million in new HMBS pools, an increase largely driven by a big issuance of seasoned Home Equity Conversion Mortgage (HECM) loans, according to a recent commentary from New View Advisors.

February saw nearly $175 million in new HMBS pools with “very seasoned” HECM collateral, according to New View Advisors, as well as a strong tail issuance totaling about $176 million.

These values helped push February’s total HMBS issuance beyond both January’s $651 million and February 2015’s $635 million. Without the seasoned loan pools, New View Advisors notes that HMBS issuance would have been a “lackluster” $593 million during the month.


In total, 97 pools were issued in February, consisting of 52 original issuances and 45 tail pools. Of February’s total HMBS issuance, tail issuances accounted for about 23%.

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 HECMs that have already had their original HMBS issuance.

Newly originated loans comprise a large majority of HMBS issuance in any given month. As a result, New View Advisors indicates that HMBS issuance is a good barometer of recent HECM production.

Volumes for newly originated HECM loans, however, have been greatly affected by the FHA’s Financial Assessment requirements enacted in April 2015. As a result, these new rules have since reduced monthly HMBS issuance from $874 million in May 2015.

Total outstanding HMBS is about $53.8 billion, an increase from just under $53.5 billion at the end of January.

“We estimate that this increase is composed of approximately $167 million in negative amortization, plus the $769 million in new issuance, minus about $661 million in payoffs,” New View Advisors writes in its market commentary, for which the company compiled using publicly available Ginnie Mae data as well as private sources.

Read the latest New View Advisors commentary.

Written by Jason Oliva

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  • Despite claims of signs of recovery, without issuance of a securitized group of seasoned HECMs, February 2016’s HECM securitization issuance would have been about 10% lower than that for January 2016.

    The problem with the two claims of signs of recovery (August and early March) by a very respected HECM analyst is he is losing credibility by his claims without any significant increases in endorsements.

    The fact is we are not seeing any signs of recovery which can be validated just yet. We are still on course to see the worst fiscal year endorsement total in 10 years. We have strong indications of the endorsement totals for this month and next and they are around 4,100 and 3,900 respectively.

    There are no events in the foreseeable future which will cause prospects to speed up their decisions. Interest rate changes could do that but even then unless the changes are significant increases to the LIBOR one month or one year index, even that is very unlikely to significantly increase HECM endorsement volume.

    Financial assessment with its LESAs is still holding down endorsements as expected. How long this will go on is unclear. Neither H4P volume nor support by more financial advisors will change that until next fiscal year at the earliest (and H4P will not have any material impact to endorsements for years).

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