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July HMBS Issuance Grows to $704 Million, Remains Below 2015 Levels

Issuance of Home Equity Conversion Mortgage-Backed Securities (HMBS) saw a slight uptick in July, but remained below its year-ago levels, according to the recent market commentary from New View Advisors.

HMBS issuers created approximately $704 million in new HMBS pools during July 2016, an increase from the previous month’s $694 million total, but well short of July 2015’s $809 million.

Issuance totals for July, according to New View Advisors, were typical of the post-Financial Assessment HECM origination market. During the month, issuers sold 101 pools divided into 49 original pools and 52 tail pools.

In total, production of original new loan pools increased to $497 million. No seasoned loan pools were issued last month.

Original pools are HMBS pools backed by the first participation in a previously uncertificated HECM loan, typically a recently originated HECM loan. These pools are created when a pool of FHA-insured Home Equity Conversion Mortgages is securitized for the first time.

Tail issuances are HMBS pools created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance. Last month, tail issuance strengthened to $207 million, typical of this year’s production, according to New View Advisors.

“This appears to be the new issuance for the industry: New production between $400-$500 million per month, tail issuance of just above $200 million per month, plus the occasional seasoned loan HMBS securitization,” writes New View Advisors in its latest commentary published this week.

Total outstanding HMBS grew to $54.4 billion in July, up only $77 million from June, which New View Advisors notes as the smallest increase in recent years.

“We estimate that July HMBS was composed of approximately $169 million in negative amortization, plus the $704 million in new issuance, minus a hefty $798 million in payoffs,” writes New View Advisors. “Payoffs figure to climb higher as more seasoned HECM loans liquidate or reach their 98% of Maximum Claim Amount threshold.”

New View Advisors compiled the data in its market commentary from publicly available Ginnie Mae data as well as private sources.

Read the New View Advisors HMBS Commentary for July.

Written by Jason Oliva