HW Media connects and informs decision makers across the housing economy. Professionals rely on HW Media for breaking news, reporting, and industry data and rankings. Moving the Housing Market Forward.
American Advisors GroupDataFinance of America ReverseHECMLive Well FinancialNewsOcwenReverse MortgageReverse Mortgage Funding

Reverse Mortgage Securities Volume on Pace to Beat 2016

Issuers of Home Equity Conversion Mortgage-backed securities (HMBS) are on pace to beat their 2016 figures despite a lack of seasoned loan pools, according to the latest data from New View Advisors.

“Despite the much-reported slowdown in HECM endorsements, HMBS issuance remains robust, aided by growth in tail issuance and without highly seasoned pools,” the New York City-based advisory firm noted in its analysis.

So far in 2017, issuers generated $4.649 billion in HMBS, on track to beat the 2016 total of $9.187 billion. The projected finish for this year still falls well short of the record $10.7 billion in securities issued in 2010, New View noted.

Reverse mortgage giant American Advisors Group yet again topped New View’s list of the top HMBS issuers, capturing a 24.4% market share with $1.132 billion of securities issued in the first six months of 2017. Finance of America Reverse came in a distance second with $810.7 million, or a 17.4% market share, followed by Reverse Mortgage Funding, Ocwen Loan Servicing, and Live Well Financial. 

And though a record 15 firms have participated in the HMBS issuance marketplace so far in 2017, the space remains crowded at the top: Those top five issuers accounted for 81.6% of all securities, an increase from 79.6% during the previous quarter.

Overall market shrinking amid big payoffs

Despite the strong issuance figures, the trend of high payoffs continued to wipe them out in June: HMBS prepayments topped $1 billion for the second consecutive month, according to New View, far exceeding the $779 million in issuance. That’s the tenth consecutive month in which payoffs exceeded new issuance, and the total outstanding HMBS market declined by $111 million from May — a new record, according to New View’s analysis. 

Citing data from Recursion Co., New View also points out that payoffs from loans that reached 98% of their maximum claim amounts totaled $640 million; for comparison, that figure was $92 million in September 2013, or just 29.8% of all payoffs.

“This probably means further shrinkage in HMBS float throughout 2017,” New View noted.

Written by Alex Spanko