True Stories: Hybrid, eNote and RON Implementation

Join expert panelists that will discuss the status of federal legislation, trends in digital adoption and how best to prepare your organization for the next generation of lending processes.

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Reverse mortgage securities continue downward march

January issuance hovers near 4-year lows

The reverse mortgage securities market continues to show the side effects of the HECM product’s rough year.

Issuance for HECM mortgage-backed securities, or HMBS, fell to just under $614 million in January, down from December’s $619 million, according to recent data from New View Advisors.

But even though HMBS totals for the last two months have been significantly better than November’s dismal $521 million, analysts say don’t be fooled. Both December and January were helped along by highly seasoned pools of original collateral – or old loans.

January saw about $304 million in original new loan pools, and while this is up from December’s $277 million and November’s $298 million, it’s below the $325 million we saw in October and $360 that closed out September.

By comparison, January 2018 saw HMBS issuers sell $869 million in loan pools.

HMBS float also fell in January as payoffs to the Department of Housing and Urban Development continued to eclipse new issuance. With more than $900 million in payoffs, outstanding HMBS totaled $55.031 billion in January, down about $100 million in December.

New View predicts that HMBS float will fall below $55 billion by the end of February, which may create liquidity concerns for investors. For the last two years, float has stayed in the $55-$57 million range.

The numbers reflect a tough year for HMBS, which closed out 2018 with $9.6 billion, a drop from 2017’s $10.5 billion.

“The HMBS market will be hard pressed to equal last year’s totals, which also included HMBS issuance backed by new HECM loans originated at higher PLFs,” New View wrote.

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