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HMBS Market Stabilizes in February

After a strong January that saw the issuance of Home Equity Conversion Mortgage-backed securities jump significantly from the same point in 2016, the marketplace fell back to Earth for February, according to data released Monday from New View Advisors LLC.

The New York City-based advisory firm reported $713 million in HMBS production for February 2017, a substantial drop from January’s robust $868 million. New View laid the blame primarily on a complete lack of “seasoned” loan pool issuances, which helped fuel January’s growth.

Instead, HMBS issuers logged 97 new pools in February, with 49 tail pools — or pools created by the uncertificated portions of HECMs that have already been issued as HMBS — and 48 original pools. That overall total is down from the 121 total logged in January, which included 57 originals and 64 tails. HMBS issuance tends to be one of many indicators of HECM growth trends, as recently originated loans generally account for a significant portion of HMBS creation each month.

New View continues to point out the consistently high amount of HMBS payoffs, which have now exceeded new issuance for the past six months: Payoffs totaled $843 million in February 2017, down from $870 million in January but still well in excess of the month’s issuances.

The total value of outstanding HMBS rose about $45 million between January and February, after contracting for the first time ever in December 2016.

New View expects payoff numbers to remain high as the glut of seasoned loans from the years of fixed-rate, full-draw, high principal limit factor HECM loans continue to see reassignment to HUD, with $1 billion in a single month not unlikely over the coming year.

Read New View’s full report, which the advisory firm compiles from Ginnie Mae and other data sources, here.

Written by Alex Spanko