Ginnie Mae-approved issuers of HECM mortgage-backed securities (HMBS) created approximately $857 million in new HMBS pools during May, a month that featured a “weak” tally in original pools mitigated by seasoned pool issuance, according to the latest New View Advisors commentary.
May’s HMBS issuance exceeded April’s $775 million, but remained below its year-ago level of $874 million in May 2015, as noted by New View Advisors, which compiled its commentary from publicly available Ginnie Mae data as well as private sources. Last month, issuers sold 94 pools comprising 43 original pools and 51 tail pools.
Original HMBS pools are created when a pool of Federal Housing Administration-insured Home Equity Conversion Mortgages (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.
Production of original new loan pools remains in a “historically low range,” tallying only $449 million in May, according to New View Advisors.
The two seasoned pools contributing to May’s totals amounted to $196 million and were backed by 8-year-old CMT loans and 7-year-old LIBOR loans.
“Tail issuances remained strong at about $211 million of May’s total,” writes New View Advisors in its commentary. “This appears to be the new issuance range for the industry: New production between $400-$500 million per month, tail issuance of just above $200 million per month, plus the occasional seasoned loan HMBS securitization.”
Total outstanding HMBS totals $54.3 billion, up from about $54 billion at the end of April—an increase New View Advisors estimates is composed of approximately $168 million in negative amortization, plus the $857 million in new issuance, minus $750 million in payoffs.
Read the New View Advisors commentary for May 2016 HMBS issuance.
Written by Jason Oliva