Reverse Mortgage Securities Volume on Pace to Beat 2016

Issuers of Home Equity Conversion Mortgage-backed securities (HMBS) are on pace to beat their 2016 figures despite a lack of seasoned loan pools, according to the latest data from New View Advisors.

“Despite the much-reported slowdown in HECM endorsements, HMBS issuance remains robust, aided by growth in tail issuance and without highly seasoned pools,” the New York City-based advisory firm noted in its analysis.

So far in 2017, issuers generated $4.649 billion in HMBS, on track to beat the 2016 total of $9.187 billion. The projected finish for this year still falls well short of the record $10.7 billion in securities issued in 2010, New View noted.


Reverse mortgage giant American Advisors Group yet again topped New View’s list of the top HMBS issuers, capturing a 24.4% market share with $1.132 billion of securities issued in the first six months of 2017. Finance of America Reverse came in a distance second with $810.7 million, or a 17.4% market share, followed by Reverse Mortgage Funding, Ocwen Loan Servicing, and Live Well Financial. 

And though a record 15 firms have participated in the HMBS issuance marketplace so far in 2017, the space remains crowded at the top: Those top five issuers accounted for 81.6% of all securities, an increase from 79.6% during the previous quarter.

Overall market shrinking amid big payoffs

Despite the strong issuance figures, the trend of high payoffs continued to wipe them out in June: HMBS prepayments topped $1 billion for the second consecutive month, according to New View, far exceeding the $779 million in issuance. That’s the tenth consecutive month in which payoffs exceeded new issuance, and the total outstanding HMBS market declined by $111 million from May — a new record, according to New View’s analysis. 

Citing data from Recursion Co., New View also points out that payoffs from loans that reached 98% of their maximum claim amounts totaled $640 million; for comparison, that figure was $92 million in September 2013, or just 29.8% of all payoffs.

“This probably means further shrinkage in HMBS float throughout 2017,” New View noted.

Written by Alex Spanko