HECM-Backed Securities Payoffs Cool Off Slightly, Issuance Grows

For the first time since April, Home Equity Conversion Mortgage-backed securities payouts didn’t total $1 billion, but prepayments still remain high as seasoned loans continue to hit 98% of their maximum claim amounts.

HMBS prepayments totaled $971 million last month, according to the most recent data from New View Advisors, down from a record $1.07 billion in June. That’s still good enough for the third-highest total ever, and payoffs once again exceeded new issuance for the 11th consecutive month. 

Of that $971 million, $576 million came from loans hitting 98% of their maximum claim amounts, representing a drop from June but still indicative of a larger trend in the industry according to New View.


“Overall the trend has been a steady rise,” New View noted in its analysis. “This probably means further shrinkage in HMBS float throughout 2017.”

New View also logged the first appearance of Longbridge Financial in the HMBS issuance market; after receiving approval at the end of May, the Mahwah, N.J.-based lender issued two HMBS pools with a total of $54 million, according to New View.

Longbridge’s initial contribution came during a strong month for new original loan pools, with a total of 46 bringing the dollar amount to $622 million for the month — up from June’s $571 million. There were also 63 tail pools, with highest dollar-value issuance since January, for a combined $848 million in issuance.

Read the New York City-based New View Advisors’ full commentary here.

Written by Alex Spanko

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    • John,

      This just means that other lenders did not get these loans. Since pools consist of closed loans and the two pools did nothing to increase closed loans, this is nothing more than taking the same pie and cutting it into smaller pieces.

  • The trouble is, the secondary market is not seeing sufficient supply just to replace the number of HECMs now terminating or going into assignment.

    A shrinking investment base is not a good thing and sends the wrong message from an industry that says sales have “appeared to be elusive,” what for the last 96 months? It is hard to believe that an industry leader would make such a comment in the industry’s flagship magazine.

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