American Advisors Group (AAG) has retained its leading position as the top issuer of Home Equity Conversion Mortgage-backed securities (HMBS) in Q3 2019, with $1.38 billion of issuance leading to 23% of market share. This is according to publicly available GNMA data and private sources compiled by New View Advisors.
The top five issuers are rounded out by Longbridge Financial ($1.29 billion at 21.5% market share, its highest ranking yet); Reverse Mortgage Funding ($1.1 billion at 18.6%); Finance of America Reverse ($855 million at 14.3%); and PHH Mortgage Corp (parent of Liberty Home Equity Solutions, $665.8 million at 11.1%), respectively.
“These five issuers accounted for 88.5% of all issuance, up from 2019 Q2’s 83%, and back near the Top-5 concentration high of 91% at year-end 2018,” writes New View in the commentary accompanying the release of the data. “There were 13 active HMBS issuers during the quarter. Live Well Financial is gone, and one-time issuer Synergy One Lending did not issue securities in the quarter.”
With respect to Longbridge’s rise to number 2 on the HMBS issuer rankings, the company started issuing in Q3 2017, where they were listed at number 8, according to New View data. Since then, Longbridge has been steadily rising in the rankings.
New View also advises industry observers to expect that certain market factors will lead to lower levels of HMBS issuance volume.
“2019 Q3 saw $2.33 billion of HMBS issued, up from both Q2’s $1.98 billion and Q1’s $1.67 billion. For the first nine months, industry volume is off 19% from a year ago,” New View writes. “Total HMBS issuance in the first nine months of 2018 was $7.43 billion. Even with highly seasoned pool issuance, expect lower HMBS issuance volume going forward.”
In terms of the factors affecting the issuance levels for the major lenders, New View notes that in the case of AAG it all comes down to new originations, while other lenders made moves in the rankings based on highly-seasoned pools.
“Note AAG’s totals are all new originations, with no highly seasoned pools issued,” New View writes. “Longbridge’s rise in the rankings is attributable in large part to a spate of highly seasoned pool issuance during the quarter. RMF previously made similar leaps in the league tables with their seasoned pool issuances. As a result of Longbridge’s surge, RMF was pushed to third [place].”
Read the Q3 issuer rankings at New View Advisors.