The production of new Home Equity Conversion Mortgage-backed securities (HMBS) declined in November to approximately $298 million in issuance for the month, down from $325 million in October and $360 million in September. Total issuance hit a four-year low, at $521 million in issuance and 84 pools, according to data compiled and released by New View Advisors and Baseline Reverse.
American Advisors Group (AAG) continues to lead the charge among issuers, with nearly $100 million in new production during the month and $50 million in tail pools.
“The market has yet to find its new normal,” writes New View Advisors in monthly commentary in response to the decline. “Reverse mortgage lenders face a new era of reduced volume, primarily due to the new lower Principal Limit Factors (“PLFs”) for [HECMs] effective last year. Rising interest rates will not help either, as they generally require lower PLFs.”
The top five producers of new HMBS include AAG with $96 million of new production at 32 percent market share; Ocwen with $49.7 million at 16.7 percent; Finance of America Reverse (FAR) with $47.7 million at 16 percent; Reverse Mortgage Funding (RMF) with $44.8 million at 15.1 percent; and Longbridge with $43.3 million at 14.5 percent.
Three of the top five lenders in this tabulation actually experienced new production growth when compared with each of their respective October tallies, but the overall total of HMBS issuance still declined by roughly $27 million over the previous month
This year has seen more declines than gains in HMBS issuance overall, with a particularly sharp drop occurring between February ($605 million in new production) and March ($422 million), with declines continuing through August ($338 million). In September, there was a slight climb again to $360 million before beginning a new downward trend in October that persists into the November data.
Written by Chris Clow