Reverse Mortgage Securities Market Sets Record in December

Issuers of reverse mortgage-backed securities (HMBS) had a record end to 2017, logging the highest monthly issuance total in almost eight years.

HMBS firms generated 106 loan pools for a total of $1.35 billion, outpacing $1 billion in payoffs — the first time in 15 months that issuance exceeded payouts, according to the most recent analysis from New View Advisors. Those 106 loan pools were divided evenly between 53 original and 53 “tail” pools.

The New York City-based advisory and analysis firm identified the pre-October 2 spike in applicants seeking to lock in higher principal limit factors as a key reason behind the solid production of new loan pools.


“Production of original new loan pools was a strong $748 million, reflecting the mad rush of origination at the end of FY 2017,” New View observed.

December’s total of $1.02 billion in payoffs was still historically strong, ranking as the sixth-highest monthly figure of all time.

“Total HMBS float has been stuck between $54 billion and $56 billion for nearly two years, though this may change in 2018 as the new principal limit factors (PLFs) start to reduce origination volume,” New View wrote.

Quarterly numbers also strong

On a quarterly basis, the industry generated $2.1 billion in new HMBS — excluding tails — during the final part of 2017.

“4Q ’17 was better than 3Q, and as an industry we have improved consistently quarter after quarter,” an analysis from the St. Johns, Fla.-based Baseline Reverse noted.

Leading the charge, according to Baseline, was industry leader American Advisors Group, which logged $158.6 million in new production for 21.2% market share in December. Finance of America Reverse grabbed 20.5% in the month, with $153.4 million in new issuance, followed by Reverse Mortgage Funding, Ocwen, and LiveWell.

Baseline’s numbers also show a distinct post-October surge, with $754 million in new production in November and $747 million in December — as compared to $610 million in October.

Written by Alex Spanko

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  • Finally, a good NET quarter for the industry. It’s about time.

    Yet there are more fixed rate Standard assignments looming around the corner. The margin of success was not all it could be. The industry lacks too much of one thing — sufficient demand for more HECM originations.

    • While a good net quarter, I am not sure that the reason is all that great. If it were not for the major changes in October, then everything would have stayed the same. I think you will see the next quarter being very low. On the counseling side, I have gone from seeing 4 to 8 households a week last year at this time to seeing 2 to 4 a week this year.

      Frank J. Kautz, II
      Staff Attorney

      Community Service Network, Inc.
      52 Broadway
      Stoneham, MA 02180
      (781) 438-1977
      (781) 438-6037 fax
      [email protected]

      • You hit the nail on the head, Frank. Anyone taking heart from these numbers is in for a big let-down as we move forward and into securitization of post-Oct 2 loans.

  • John,

    The concept and agreement among lenders that the industry should be reaching out to the financial community is not new. As you probably know, It dates back almost to the founding of the industry.

    There is no question that there has been a definite effort by the industry to reach out to the financial community since 2010 but it has been met with mixed results. From a practical standpoint, many originators are simply under prepared for the effort and the knowledge it takes for financial advisors to rely on the skill level of the originator. Lenders have attempted stop gaps but their emphases have been on investment theory rather than focusing on answering the practical cash inflow problems of the the client of the financial advisor.

    While I agree with your points about working smarter, reaching out to new sources of originations, etc., for those who are focused on financial advisors, there is a need to step back and find out what has worked and what has not. We have all heard the old adage that those who do the same thing over and over expecting different results are practicing insanity.

    BUT it is also time for a next step, a bold step forward. It is time that the industry begin focusing on acquiring origination talent who know how to replicate and modify amortization schedules along with creating associated graphs. Without basic tools and knowledge of how to work in Excel or other electronic spreadsheets, our message will quickly become stilted, redundant, and old. As to cash inflow and the impact of HECMs on the estates of borrowers, we should be the experts who can bend our modeling to the express needs of our referral sources. We should be solving problems, not simply supplying an extremely good cash inflow product.

    How lenders get there will be interesting to observe. It will not be simple but if the industry is serious about the financial advising community, it will move forward and start working on the details.

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