A lack of seasoned pools led to lower issuance of Home Equity Conversion Mortgage-backed securities (HMBS) in November compared to the previous month, according to the latest commentary from New View Advisors.
HMBS issuance totaled approximately $718 million in November—the fourth lowest monthly dollar volume this year—which was down from October’s total of $832 million.
Meanwhile production of original new loan pools was $504 million. Although this dollar amount represents an increase from October’s $487 million, November’s original new loan pool issuance was generally in line with the previous months this year, notes New View Advisors.
During the month, HMBS issuers created 108 pools in November, comprising 53 original pools and 55 tail pools.
Whereas original pools are those HMBS pools backed by the first participation in a previously uncertificated HECM loan, tail HMBS issuances are HMBS pools consisting of subsequent participations.
Total outstanding HMBS ticked up to just over $55 billion, an increase of only $44 million from October.
For the month of November, New View Advisors estimates the month’s HMBS was composed of approximately $171 million in negative amortization, plus the $718 million in new issuance, minus about $845 million in payoffs.
‘Payoffs have exceeded new issuance in 5 of the last 6 months,” states New View Advisors. “Payoffs figure 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