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Private Reverse Mortgage Volume Inches Closer to HECM

While Home Equity Conversion Mortgage-backed securities (HMBS) production fell by 14% in calendar year 2019, the additional origination of proprietary reverse mortgages could make the amount of loans backed by new collateral roughly equal to figures recorded in 2018. Additionally, data indicates that a quarter of new origination dollars come from the proprietary reverse mortgage market, according to publicly available Ginnie Mae data and private sources compiled by New View Advisors.

“With this month’s issuance, the HMBS market totaled about $8.3 billion for calendar year 2019,” writes New View Advisors in its commentary accompanying December HMBS data. “HMBS issuance totaled $9.6 billion in 2018 and $10.5 billion in 2017. However, securitization of private reverse mortgages was much higher than previous years. As a result, we estimate that the total issuance of reverse mortgage securities backed by new collateral was about the same as 2018.”

As more and more reverse mortgage lenders either create new proprietary reverse mortgage products or offer pre-existing products that are already in place, private products are taking up more and more of the total amount of reverse mortgage originations, New View says, which has the potential to lead to proprietary originations ultimately surpassing more traditional Home Equity Conversion Mortgage (HECM) originations.

“Private reverse mortgages, most of them jumbo-sized, now make up more than 25% of new origination by dollar volume,” New View writes.

With a more focused look at monthly totals, the production of new HMBS totaled approximately $908 million in December as lower interest rates continued to strengthen new production. December saw 92 new pools issued, including approximately $484 million of new, maintaining the generally high levels of production seen throughout the year, New View says.

The top five HMBS issuers accounted for 89.2% of all issuance, led by American Advisors Group (AAG) with $1.97 billion of issuance and a total market share of 23.87%. It was followed in the top 5 by Longbridge Financial ($1.7 billion at 20.83%), Reverse Mortgage Funding ($1.49 billion at 18.11%), Finance of America Reverse ($1.2 billion at 14.69%), and PHH Mortgage Corp ($962 million at 11.65%), respectively.

Read the December HMBS commentary and 2019 HMBS Issuer League Tables at New View Advisors.