HMBS Issuance Falls in June, AAG is Top Issuer in Q2

The production of new Home Equity Conversion Mortgage-backed securities (HMBS) fell in June to just over $561 million, which marks the end of the slowest half-year of issuance in five years. This is according to publicly available GNMA data and private sources compiled by New View Advisors.

The firm also recorded the top HMBS issuers in Q2 of 2019, with AAG retaining the top spot with $847.4 million of issuance coming out to 23.3 percent of market share. The top five issuers are rounded out by Reverse Mortgage Funding ($651.7 million at 17.8 percent); Finance of America Reverse ($553.8 million at 15.2 percent); Longbridge Financial ($552.2 million at 15.2 percent); and PHH Mortgage Corp (parent of Liberty Home Equity Solutions, $425.1 million at 11.6 percent).

“These five issuers accounted for more than 83 percent of all issuance, up 4 percent from 2019 Q1’s 79 percent. There were 14 active HMBS issuers during the quarter,” writes New View in its commentary accompanying the issuer rankings. “One-time issuer Synergy One Lending did not issue securities in the quarter.”

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In terms of the drop in overall issuance observed in the month of June, New View finds a possible reason for this, centered on highly seasoned HMBS pools.

“No highly seasoned pools were issued,” writes New View in its accompanying issuance commentary. “83 pools were issued in June, including about $331 million of new unseasoned HECM first participation pools. HMBS float will almost certainly fall if June’s payoffs are in line with recent months.”

However, a slight uptick in new production was also recorded that has the possibility to lead to some positivity in the back half of 2019, the commentary notes. Still, that is not guaranteed.

“One month cannot predict a trend,” said Michael McCully, partner at New View Advisors in an email to RMD. “Our only point is new origination volume is moving higher, albeit slightly.”

June’s production of original new loan pools totaled approximately $331 million, a higher figure than any previous month in 2019. “After several months of Groundhog Day mode, with very similar volume statistics, we may be seeing the benefit of lower interest rates helping new origination volume,” says New View.

The recently-closed Live Well Financial issued one HMBS pool in June, totaling approximately $1.3 million. Live Well ceased originating new loans in May and is currently embroiled in a bankruptcy lawsuit with several creditors. In May, Live Well issued 6 HMBS pools for a total of approximately $23 million, though its operations are still believed to have been active for the first two full days of that month.

Read the full June issuance commentary and Q2 issuer rankings at New View Advisors.

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