Newcomer Longbridge Leads HECM-Backed Securities Issuers in August

It’s been a common story in the world of Home Equity Conversion Mortgage-backed securities (HMBS) in recent months: Strong production was once again balanced out by significant levels of prepayments.

HMBS issuers created 92 new loan pools in August with a total value of $913 million, according to the most recent data from industry analysts New View Advisors. That total includes 52 original pools and 40 “tails,” or pools created from the uncertificated portions of previously issued HECMs.

Original pools accounted for $736 million of the total issuance in August, the most robust total since this time last year, New View noted.

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But prepayments clocked in at $1.06 billion last month, the third-highest total ever recorded — making August the 12th consecutive month in which prepayments were higher than new issuance. The industry first broke through the $1 billion prepayment mark back in June, with New View citing the significant portion of loans reaching 98% of their maximum claim amounts.

For instance, $590 million of the payouts in August came from loans that hit 98% of their MCAs, according to New View and data from Recursion Co.; back in September 2013, that share was only $92 million, or 29.8% of the payoffs for that month.

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

Longbridge surge

Longbridge Financial may have only issued its first HMBS in late July,  but the Manwah, N.J.-based firm has already jumped to the top of the leaderboard: Longbridge issued nine pools for a total of $215 million in August, New View reported.

The firm only received HMBS approval from Ginnie Mae in May, and formally entered the market with two pools in July pegged at $55 million.

Written by Alex Spanko