Issuance of Home Equity Conversion Mortgage-backed securities (HMBS) totaled approximately $832 million in October, representing the fourth-highest monthly dollar volume this year, according to the latest commentary from New View Advisors.
HMBS issuers created 100 pools in October, keeping pace with September and also aided by seasoned pool issuance, noted New View Advisors, which compiled its commentary using publicly available Ginnie Mae data as well as private sources.
Compared to September, production of original new loan pools in October fell to $487 million, down from the previous month’s total of approximately $624 million, but in line with the $467 million issued in August.
The pool tally in October comprised 47 original pools and 53 tail pools. The month’s HMBS issuance also included two “highly seasoned” original pools totaling $136 million, noted New View Advisors.
Whereas Original pools are HMBS pools that are backed by the first participation in a previously uncertificated HECM loan, Tail pools are created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance.
In October, tail issuance totaled approximately $209 million, typical of this year’s production, according to New View Advisors.
Meanwhile, total outstanding HMBS as of October grew to just under $55 billion, up about $111 million from September.
“We estimate that October HMBS was composed of approximately $171 million in negative amortization, plus the $832 million in new issuance, minus a record $891 million in payoffs,” writes New View Advisors in its commentary.
Payoffs have exceeded new issuance in 4 of the last 5 months, added New View Advisors, as payoffs continue to climb as more seasoned HECM loans liquidate or reach 98% of their Maximum Claim Amount.
Read the New View Advisors commentary here.
Written by Jason Oliva