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HMBS Issuers Start New Year Strong

HMBS issuers turned in a strong January on the backs of pools both new and seasoned.

The production of new home equity conversion mortgage backed securities totaled $525 million in January 2016, according to a February report from New View Advisors LLC — a gain of $10 million from the previous month, and a jump of $56 million from the total in January 2016.

New View reported a total of 57 new pools and 64 “tail pools,” or HMBS issuances created from uncertificated portions of HECMs associated with existing HMBS. Lenders issued $344 million worth of these “tails” in January 2017, the third largest monthly total of all time, according to New View.

Michael McCully, a partner at the New York City-based financial services firm, also called out the high number of HMBS payoffs in an interview with RMD: Though the January figure declined after a record in December 2016, McCully noted that a glut of fixed-rate loans from the years preceding more stringent HECM regulations — including 2009 to 2011, which McCully called out as key years for origination volume — are increasingly maturing and seeing reassignment to HUD.

“We’re seeing the rabbit going through the snake,” McCully said of this period. “That will normalize over time.”

New View’s report also noted that payoffs have exceeded new HMBS issuances for five consecutive months through January.

Written by Alex Spanko