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RMF Rises as HMBS Issuers Prepare for Decline

Home Equity Conversion Mortgage-backed securities (HMBS) issuance remained strong in the first quarter of 2018, with Reverse Mortgage Funding taking the top position among issuers with nearly $1.1 billion in total value for the quarter.

Yet the industry should prepare for a decline ahead, notes New View Advisors in its quarterly data analysis on HMBS. 

With RMF “surging” to the top of the issuers list with 36.4% market share, the company is outpacing the industry’s second-place issuer by quarterly value, American Advisors Group. The Orange, Calif.-based AAG holds 19.8% market share compared to RMF’s share.

The overall picture reported by New View also looks bright, with the first quarter totaling $2.97 billion in issuance — equivalent to 28% of the entire calendar year issuance in 2017. 

“…Though this belies the true story,” New View notes. “Unless highly seasoned HMBS becomes the norm, expect much lower volume for the remainder of 2018 due to the new [principal limit factor] curves in effect since October.”  

Tail issuance will bolster profit stability to offset the slowdown, New View’s note continues. 

View the New View Commentary and full issuer rankings. 

Written by Elizabeth Ecker